The literature has not reached a consensus on the motivation and
implications of pyramidal ownership schemes. For some, such arrangements
make it easier for controlling shareholders to expropriate outside
investors. More recently, some studies have challenged this view and
emphasized that their rationale lies in overcoming financial constraints.
This paper focuses on whether firms owned through pyramidal schemes are more
likely to be listed on the “Novo Mercado,” the Brazilian stock exchange’s
premium listing segment created in 2000, which prohibits firms from issuing
non-voting shares. We built a dataset of ownership data with annual
observations for a panel of firms over the period 2003-2010 by
hand-collecting data drawn from reports that firms submit periodically to
the Brazilian securities regulator (CVM). Estimating fixed effects
non-linear panel data models of a binary dependent variable, we find that
firms listed on the Novo Mercado are less likely to be owned through a
pyramid arrangement, result which appears to be consistent with the
expropriation view.
Industrial determinants of anti-dumping in Brazil – Protection, competition and performance: An analysis with binary dependent variable and panel data
