Owners, Boards, Managers and the Private Benefits of Control: A Study of Dual Class Stock Firms in an Emerging Market

2011 ◽  
Author(s):  
Alexander Muravyev ◽  
Irina Berezinets ◽  
Yulia Ilina
Keyword(s):  
Emerging Market ◽  
Private Benefits ◽  
Private Benefits Of Control ◽  
Dual Class

The ultimate controlling owner and corporate governance in Brazil

2019 ◽  
Vol 19 (1) ◽  
pp. 120-140 ◽  
Author(s):  
Vicente Lima Crisóstomo ◽  
Isac de Freitas Brandão
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Governance System ◽  
Private Benefits ◽  
Controlling Shareholder ◽  
Content Type ◽  
Controlling Shareholders ◽  
Private Benefits Of Control ◽  
Corporate Governance System

Purpose High ownership concentration makes controlling blockholders powerful enough to use private benefits of control and able to shape the corporate governance system to favor their own interests. This paper aims to examine the effect of the nature of the ultimate firm owner on the quality of corporate governance in Brazil. Design/methodology/approach Econometric models are estimated to assess whether the nature of the ultimate controlling shareholder affects the quality of the corporate governance system. Models are estimated using panel data methodology with coefficients estimated by the generalized method of moments system estimator. Findings The results show that the absence of a controlling shareholder has a positive effect on corporate governance, whereas the presence of a controlling blockholder, or a shareholder agreement among a few large shareholders, has a negative effect. This adverse effect holds when the controlling blockholder is a family or another firm. The findings are in line with the expropriation effect given that weaker corporate governance system facilitates controlling shareholders’ ability to extract private benefits of control. The findings also give support to the substitution effect as powerful blockholders take on the management monitoring function by weakening the board. Originality value Following important previous literature, the study investigates the effect of the nature of large controlling shareholders on the adoption of good corporate governance practices. The work provides additional evidence on the effect of the nature of large controlling shareholders on the quality of the corporate governance system in Brazil, taking into account the main kinds of controlling blockholders present in that market. The findings give support to both the expropriation and substitution hypotheses highlighting the presence of the principal-principal agency model in an important emerging market, Brazil.

Minority Shareholder Protections and the Private Benefits of Control for Swedish Mergers

2004 ◽  
Vol 39 (1) ◽  
pp. 167-191 ◽  
Author(s):  
Martin Holmén ◽  
John D. Knopf
Keyword(s):  
Tax Compliance ◽  
Limited Evidence ◽  
Private Benefits ◽  
Private Benefits Of Control ◽  
Shareholder Protection ◽  
Degree Of Separation ◽  
Using Data ◽  
Dual Class Shares ◽  
Dual Class ◽  
High Degree

AbstractSweden has a high degree of separation of ownership from control through pyramids, dual-class shares, and cross-holdings. This increases the potential for private benefits of control. However, Sweden's extralegal institutions—tax compliance and newspaper circulation—are consistent with greater shareholder protection. Using data on Swedish mergers we find limited evidence of shareholder expropriation. Apparently, Sweden's extralegal institutions offset the drawback of weak corporate governance.

Private Benefits of Control and Dual-Class Share Unifications

2007 ◽  
Author(s):  
Benjamin Maury ◽  
Anete Pajuste
Keyword(s):  
Private Benefits ◽  
Private Benefits Of Control ◽  
Dual Class

Private Benefits of Control and Dual-Class Share Unifications

2011 ◽  
Vol 32 (6) ◽  
pp. 355-369 ◽  
Author(s):  
Benjamin Maury ◽  
Anete Pajuste
Keyword(s):  
Private Benefits ◽  
Private Benefits Of Control ◽  
Dual Class

Corporate payouts in dual classes

2019 ◽  
Vol 45 (12) ◽  
pp. 1542-1562
Author(s):  
Adam Y.C. Lei ◽  
Huihua Li ◽  
Jin Yu
Keyword(s):  
Agency Problems ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Publicly Traded ◽  
Private Benefits ◽  
Single Class ◽  
Content Type ◽  
Private Benefits Of Control ◽  
Dividend Payments ◽  
Dual Class

Purpose The purpose of this paper is to examine the dividend payments and share repurchases of dual-class firms that have both their superior voting shares and inferior voting shares publicly traded. Design/methodology/approach This paper uses matched dual-class and single-class samples from 1994 to 2015 and logit models to evaluate the likelihoods of dividend payment and share repurchase between dual-class firms and single-class firms. Findings The results show that dual-class firms are more likely than the matched sample of single-class firms to pay dividends in both share classes. Dual-class firms, however, are more likely to repurchase their superior shares than single-class firms and their inferior shares. Research limitations/implications The results suggest that dual-class firms do not use corporate payouts to either mitigate agency problems or maintain the private benefits of control. Instead, dual-class firms use dividend payments to mitigate agency problems while using repurchases of superior shares to maintain the private benefits of control, which supports the agency payout hypothesis. Practical implications This paper highlights the differences between dividend payments and share repurchases as forms of corporate payouts and suggests that firms may choose a particular form for a particular purpose. Originality/value This paper provides the first piece of empirical evidence on the corporate payouts of dual-class firms separating their superior voting shares and inferior voting shares.

Private Benefits of Control and Control Premium

2019 ◽  
Vol 33 (2) ◽  
pp. 47-84
Author(s):  
Joon-Hyug Chung
Keyword(s):  
Private Benefits ◽  
Private Benefits Of Control ◽  
Control Premium ◽  
And Control
Sign in / Sign up

Export Citation Format

Share Document