Citigroup's Shareholder Tango in Brazil (A)

2017 ◽  
pp. 1-16
Author(s):  
Susan Perkins
Keyword(s):  
Ownership Structure ◽  
Private Equity ◽  
Market Failure ◽  
Joint Venture ◽  
Telecommunications Industry ◽  
List Type ◽  
Strategic Choices ◽  
Ownership Structures ◽  
Pyramidal Ownership ◽  
Group Ownership

Citigroup has discovered that Daniel Dantas, hired five years earlier to manage Citigroup's $750 million private equity investment in a Brazilian telecommunications industry joint venture, has allegedly mismanaged more than $300 million in assets and contracts. Dantas's misconduct relates to his management of Citigroup's CVC Fund and II-FIA, a legal entity representing a group of large Brazilian pension funds. Together with Dantas's Grupo Opportunity, CVC and II-FIA own Brasil Telecom, the third largest telecommunications company in the country. The partnership's pyramidal ownership structure makes his actions difficult to track. Citigroup must quickly determine how to disrupt Dantas's intricately woven web of control without allowing him to extract further value from the partnership. This case provides concrete examples of the expropriation risks joint venture partners face when unfamiliar with pyramidal group ownership structures. Understand and recognize governance-based differences between a pyramidal business group (e.g., the joint venture related to Brasil Telecom) and that of a widely held firm (i.e., a typical U.S. firm's ownership structure); understand that to avoid market failure firms must anticipate and adjust to the non-market institutional “rules of the game,” which vary greatly across nations; and understand the range of strategic choices and their optimal application to protect minority shareholder rights.

Citigroup's Shareholder Tango in Brazil (B)

2017 ◽  
pp. 1-3
Author(s):  
Susan Perkins
Keyword(s):  
Ownership Structure ◽  
Private Equity ◽  
Market Failure ◽  
Joint Venture ◽  
Telecommunications Industry ◽  
Strategic Choices ◽  
Ownership Structures ◽  
Institutional Rules ◽  
Pyramidal Ownership ◽  
Group Ownership

Citigroup has discovered that Daniel Dantas, hired five years earlier to manage Citigroup's $750 million private equity investment in a Brazilian telecommunications industry joint venture, has allegedly mismanaged more than $300 million in assets and contracts. Dantas's misconduct relates to his management of Citigroup's CVC Fund and II-FIA, a legal entity representing a group of large Brazilian pension funds. Together with Dantas's Grupo Opportunity, CVC and II-FIA own Brasil Telecom, the third largest telecommunications company in the country. The partnership's pyramidal ownership structure makes his actions difficult to track. Citigroup must quickly determine how to disrupt Dantas's intricately woven web of control without allowing him to extract further value from the partnership. This case provides concrete examples of the expropriation risks joint venture partners face when unfamiliar with pyramidal group ownership structures.(1) Understand and recognize governance-based differences between a pyramidal business group (e.g., the joint venture related to Brasil Telecom) and that of a widely held firm (i.e., a typical U.S. firm's ownership structure); (2) understand that to avoid market failure firms must anticipate and adjust to the non-market institutional “rules of the game,” which vary greatly across nations; and (3) understand the range of strategic choices and their optimal application to protect minority shareholder rights.

scholarly journals IPOs, the level of private equity engagement and stock performance matters: Empirical evidence from Germany

2017 ◽  
Vol 15 (1) ◽  
pp. 72-82 ◽  
Author(s):  
Andreas Oehler ◽  
Tim A. Herberger ◽  
Matthias Horn ◽  
Henrik Schalkowski
Keyword(s):  
Empirical Evidence ◽  
Ownership Structure ◽  
Private Equity ◽  
Equity Capital ◽  
Stock Performance ◽  
Ownership Structures ◽  
Before And After ◽  
Research Questions ◽  
Per Se ◽  
Unique Dataset

Research on IPOs commonly focuses on the relation between firms’ pre IPO ownership structure and subsequent stock performance. We extend the literature by additionally focusing on companies’ post IPO ownership structure, in particular, private equity capital engagement, to analyse IPOs stock performance matters. For this purpose, we employ a unique dataset on German IPOs from 2004 to 2014 that allows us to identify companies’ ownership structures before and after the IPO. We compute stocks’ market-adjusted returns and information ratios for the first 200 trading days to answer two research questions. First, do stocks of companies that were (partially) owned by private equity investors prior the IPO show a different performance after the IPO than stocks of companies without prior investments of private equity investors? Second, does the extent of private equity investors’ involvement at the IPO (i.e. their pre and post IPO shareholdings) influence the stock performance following the IPO? We do not find evidence that stocks of companies, which had private equity investors as shareholders prior to the IPO, outperform stocks of companies without private equity investors per se. However, for the subsample of companies that had private equity investors as shareholders, we document that the stronger the private equity investors reduce their engagement the stronger is the performance of the issued stock.

scholarly journals Information Asymmetry, Ownership Structure and Cost of Equity Capital: The Formation for Open Innovation

2021 ◽  
Vol 7 (1) ◽  
pp. 48
Author(s):  
Ade Imam Muslim ◽  
Doddy Setiawan
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Ownership Structure ◽  
Trading Volume ◽  
Foreign Ownership ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Ownership Structures ◽  
The Cost

Our study aims to investigate how information asymmetry and ownership structure affect cost of equity capital. For that purpose, we collected 246 issuers over 4 years for a total of 984 observations. By using panel data processing, we found that the information asymmetry we proxied through Price non-Synchronization and trading volume had an effect on the cost of equity capital. Our results also confirmed both Agency Theory and Pecking Order Theory. Both theories are in line with the conditions of the stock market in Indonesia. In addition, we found that institutional and foreign ownership structures also had an effect on the cost of equity capital. Furthermore, our results also confirmed Interest Alignment Theory and Entrenchment Theory. Our research is expected to contribute to the debate on the existence of information asymmetry and ownership structures in relation to the cost of equity capital. We also hope that it will be a valuable input for investors in considering their investment. Moreover, from the results of this study, investors can also consider foreign ownership or institutional ownership in determining their investment. In addition, stock market regulators in Indonesia can develop approaches to minimize information asymmetry and encourage foreign investors to invest in Indonesia.

Company Ownership Structure, Legal Compliance and the Probability of Winning an Employment Lawsuit in China

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Zhenxing Ke
Keyword(s):  
Life Span ◽  
Rule Of Law ◽  
Significant Influence ◽  
Ownership Structure ◽  
Statistical Result ◽  
District Courts ◽  
Legal Compliance ◽  
Private Companies ◽  
The Rule Of Law ◽  
Ownership Structures

Abstract This paper investigates empirically whether firm ownership structures contribute to varying levels of legal compliance, which ultimately influence the likelihood of winning a lawsuit. I hypothesize that private companies are more likely to lose employment lawsuits because the rule of law within the company is rarely established. Using collected 2756 employment judgments decided by district courts in Beijing between 2014 and 2018, I test this hypothesis against three other types of ownership structures in China: state-owned enterprises, wholly foreign-funded companies, and partly foreign-funded companies. The statistical result confirms that private companies are more likely to lose cases, thus supporting the proposed hypothesis. In addition, the company’s scale and the company’s life span also have a significant influence on the employment lawsuit result.

Missing the Forest for the Trees: Marketing Systems Approach to Pharmaceutical Industry Marketing Practices

2021 ◽  
pp. 027614672110373
Author(s):  
Rama K. Jayanti
Keyword(s):  
Pharmaceutical Industry ◽  
Market Failure ◽  
Systems Approach ◽  
Negative Externalities ◽  
Strategic Choices ◽  
Regulatory Oversight ◽  
Firm Reputation ◽  
Systematic Analysis ◽  
Strategic Intent ◽  
Path Dependencies

The overall aim of this study is to examine firm strategic choices that trigger negative externalities culminating in market failure, system crisis, and public harm. A conceptual framework of marketing system crisis rooted in conflict of interests (COI) theory is used to make the following arguments: (1) marketing strategies emulated by the industry actors at micro level set lock in through path dependencies, (2) such path dependencies may be associated with negative externalities in the form of reduced quality of life of downstream stakeholders in adjacent systems, (3) back lash by system actors precipitates market failure inviting regulatory oversight in the form of fines that tarnish trust and firm reputation, (4) with implications for system crisis and public welfare. A systematic analysis of court documents pertaining to pharmaceutical industry settlements bolstered by sales data from the company reports and Medicaid reimbursement data indicate that, for the case examined, diverse marketing practices are systematically developed with the strategic intent to insert external incentives that influence physician judgment and trigger market failure through negative externalities. Implications for marketing for a better world, systems health, pharmaceutical marketing, and suggestions for incorporating COI principles into theories of marketing for a better world conclude the paper.

Pyramidal Ownership Structure and Firms’ Audit Fees

2020 ◽  
pp. 1-31 ◽  
Author(s):  
Shangkun Liang ◽  
Xiangqin Qi ◽  
Fu Xin ◽  
Jingwen Zhan
Keyword(s):  
Ownership Structure ◽  
Audit Fees ◽  
Pyramidal Ownership

Quintiles IPO

2017 ◽  
pp. 1-24
Author(s):  
David P. Stowell ◽  
Vishwas Setia
Keyword(s):  
Private Equity ◽  
Life Sciences ◽  
List Type ◽  
Publicly Traded ◽  
Discounted Cash Flow ◽  
Investment Bank ◽  
Strategy Process ◽  
Firm Owners ◽  
A Company

Quintiles Transnational Holdings Inc., the largest global provider of biopharmaceutical development and commercial outsourcing services, grew its revenue at a CAGR of 7.3% and EBITDA at 13.9% between 2008 and 2012.The case is set in December 2012–April 2013, when the majority of the firm was owned by founder Dennis Gillings and four private equity firms (Bain Capital, TPG Capital, 3i Capital and Temasek Life Sciences) after it was taken private in a management-led buyout in 2003 and a subsequent buyout in 2008. Five years after the second buyout, the private equity firm owners were looking to monetize their positions and considered different strategic alternatives: M&A sale to strategic or financial buyers, IPO, or capital restructuring through special dividends.Students will step into the role of an associate at the lead investment bank working with Quintiles. They must consider the case information and determine an IPO strategy, process, potential conflicts, and valuation.After reading and analyzing the case, students will be able to: Apply valuation techniques (discounted cash flow (DCF) and publicly traded comparables) in pricing an IPO Analyze the roles of different parties involved in the transaction Discuss the process of a company filing for an IPO Evaluate different strategic alternatives available to a private equity—backed company Address conflict of interest in management—led buyouts

scholarly journals Do FDI Firms Employ More Workers than Domestic Firms for Each Dollar of Assets?

2020 ◽  
Vol 20 (56) ◽  
Author(s):  
Sakai Ando ◽  
Mengxue Wang
Keyword(s):  
United Kingdom ◽  
Ownership Structure ◽  
Structure Information ◽  
Ownership Structures ◽  
Domestic Firms ◽  
Technological Differences ◽  
The United Kingdom ◽  
To Come

This paper studies whether FDI firms employ more workers than domestic firms for each dollar of assets. Using the Orbis database and its ownership structure information, we show that, in most economies, domestic firms tend to employ more workers per asset than FDI firms. The result remains robust across individual industries in the case study of the United Kingdom. The analysis of the switchers (ownership changes from domestic to foreign or vice versa) suggests that ownership changes do not have an immediate impact on the employment per asset. This result suggests that different patterns of employment per asset seem to come from technological differences rather than from different ownership structures.

scholarly journals Ownership structure and voluntary disclosure in corporate annual reports of Malaysian listed firms

2011 ◽  
Vol 8 (2) ◽  
pp. 296-312 ◽  
Author(s):  
Poh-Ling Ho ◽  
Gregory Tower
Keyword(s):  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Positive Association ◽  
Institutional Ownership ◽  
Ownership Concentration ◽  
Annual Reports ◽  
Policy Makers ◽  
Listed Firms ◽  
Ownership Structures ◽  
The Impact

This paper examines the impact of ownership structure on the voluntary disclosure in the annual reports of Malaysian listed firms. The result shows that there is an increase in the extent of voluntary disclosure in Malaysian listed firms over the eleven-year period from 1996 to 2006. Ownership concentration consistently shows positive association with voluntary disclosure. Firms with higher foreign and institutional ownership have a significantly positive association with voluntary disclosure levels while firms with family ownership exhibit lower voluntary disclosure. Consistent with agency theory, different ownership structures have varied monitoring effects on agency costs and clearly influence firm’s disclosure practices. The findings provide insights to policy makers and regulators in their desire to increase transparency and accountability amidst the continual enhancement of corporate governance. The findings provide evidence that optimized ownership structure in any jurisdiction should be considered in any regulatory process that seeks to improve transparency.

scholarly journals Ownership structure and corporate governance: What does the data reveal about Saudi listed firms?

2017 ◽  
Vol 14 (4) ◽  
pp. 413-424 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan ◽  
Everton Dockery
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Firm Size ◽  
Ownership Structure ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Ownership Structures ◽  
Market Instability ◽  
Positive Effect ◽  
Size Variable

In this paper we examine the ownership structure of 169 firms listed on the Saudi Arabian stock market from 2008 to 2014. The analysis uses the testing methodology described by Demsetz and Lehn (1985) to examine the effects of firm and market instability on Saudi ownership structure and additionally, the effect of systematic regulation that imposes constraints on the behaviour of the selected listed firms. We find evidence, for the majority of the ownership structures considered, in favour of the view that firm size, regulation and instability affects ownership structure. The results suggest that the size variable has a positive effect on ownership concentration. Our analysis also shows that instability had some effect on ownership concentration and structure when using the non-linear specification, particularly when using firm specific instability, albeit the effect was stronger when the instability measure was accounting profit returns. Lastly, there is evidence that government-owned firms were mostly affected by regulation while diffused owned firms were affected most by instability than non-government owned firms.

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