Affinities and agreements among major brazilian shareholders

Abstract

Purpose: To provide control and ownership percentages for the three largest shareholders, details on their identity types and affinities, and their participation in formal agreements in Brazilian listed companies. Design/Methodology/Approach: Direct percentage holdings of voting and non-voting shares computed for 399 listed companies in 2007 according to four listing segments. The three largest direct and ultimate shareholders were classified into nine identity types and as signatories of shareholder agreements. Findings: The concentration of control rights remains very high but is significantly lower in the most demanding listing segment. There is a great similarity in identity types among the three largest shareholders of a company. Shareholder agreements are common either with or without a controlling shareholder and more frequent with greater control dispersion. The largest shareholder is a signatory in most agreements. Research Limitations/Implications: The pervasive affinity among the largest shareholders, the ubiquity of shareholder agreements, and the resilient control concentration levels cast doubts about the possible positive effects that more control dispersion and fewer nonvoting shares might had. Any gains from ownership arrangement changes still need to be addressed. Practical Implications: Investors must be aware that benefits from greater control dispersion may be offset by formal and informal agreements among the largest shareholders. Originality/Value: The sample includes virtually all listed companies, agreements were investigated in all of them, and identity associations were mapped directly and indirectly for the three largest shareholders.