Reasons for and implications of the presence of institutional investors in the ownership structure of Brazilian companies

• Autor(a) principal: Lélis Pedrode Andrade
• Data de Publicação: 2016
• Outros Autores: Aureliano Angel Bressan, Robert Aldo Iquiapaza, Wesley Mendes-da-Silva
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Institucional da UFMG
• Texto Completo: http://hdl.handle.net/1843/42698
• topic: Corporate Governance; Institutional Investor; Firm Value; Brazilian Stock Market; Governança corporativa; Investimentos; Bolsa de valores

Using 3,057 observations from 2000 to 2012, we found the risk of expropriation of minority shareholders by controlling shareholders is positively associated with participation of institutional investors in equity funding. There is no evidence that these investors increase the likelihood of substituting the chief executive officer or increase the company’s value or its financial performance. However, the presence of institutional investors is associated with higher company debt. This study suggests that institutional investors assume a function not fully explained by agency theory, such as enabling greater access to debt markets, but accentuate the agency conflict between controlling and minority shareholders. The main results show that the presence of institutional investors mitigates agency conflicts between shareholders and creditors, but increases the risk of expropriation of minority shareholders.