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The governance structure and strategy of Brazilian family business groups

Grant number: 13/26512-8
Support type:Regular Research Grants
Duration: May 01, 2014 - April 30, 2016
Field of knowledge:Applied Social Sciences - Administration - Business Administration
Principal researcher:Luiz Ricardo Kabbach de Castro
Grantee:Luiz Ricardo Kabbach de Castro
Home Institution: Escola de Engenharia de São Carlos (EESC). Universidade de São Paulo (USP). São Carlos , SP, Brazil
Assoc. researchers: Guilherme Kirch ; Rafel Crespi ; Ruth Aguilera


This project aims to analyse the evolution of pyramidal ownership structure of Brazilian family business groups and its impact on strategy and performance of affiliated firms. The literature on corporate governance and finance usually takes the ownership structure of business groups as given and analyses its effect on firms' economic performance. However, little is known about how this structure evolves. In particular, although there have been some theoretical efforts to explain the formation of pyramidal structures on business groups, empirical studies demonstrating the evolution of these structures are still scarce, and the Brazilian context unexplored.Drawing upon Almeida and Wolfenzon's (2006) theory of pyramids, we analyse the evolution of pyramidal structures in Brazilian family business groups, over the period between 1997 and 2012, as a way to determine the prevalence of selection or tunnelling effects. Following these analyses, we advance the literature on the effect of ownership structure on firm's performance. To do so, we develop a system of simultaneous equations that specify the relationship between corporate governance, economic performance and financial strategies constructs. This methodology allows us to understand the effect of ownership structure on financial decisions as well as firm performance while relaxing the assumption that ownership is exogenous to corporate strategy.A better understanding of the relationship between corporate governance, financial strategies and economic performance may provide important insights for public policies that aim to improve governance practices in the Brazilian institutional environment and, eventually, stimulate private investment, contributing to the development of the Brazilian capital market.The results of this research will be submitted to peer-review journals both at national and international levels and scholarly conferences. (AU)

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Scientific publications
(References retrieved automatically from Web of Science and SciELO through information on FAPESP grants and their corresponding numbers as mentioned in the publications by the authors)
CAIXE, DANIEL FERREIRA; GUIMARAES KALATZIS, AQUILES ELIE; KABBACH DE CASTRO, LUIZ RICARDO. Controlling shareholders and investment-risk sensitivity in an emerging economy. EMERGING MARKETS REVIEW, v. 39, p. 133-153, JUN 2019. Web of Science Citations: 2.

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