ANTECEDENTS OF THE CONTROL PREMIUM IN BRAZILIAN COMPANIES: A STUDY OF ACQUISITIONS IN THE 21ST CENTURY

Resumo

In recent decades, studies have demonstrated that corporate governance shareholders of publicly traded companies do not always receive benefits that are proportional to their shareholding. Studies have identified the existence of private benefits of control as a major cause of this distortion. These benefits can be evidenced, for example, in control acquisition operations, in which there is a control premium. Despite the difficulty of measurement, the literature points to some methods for measuring these benefits. The literature also associates variables that influence this control premium, and among which are legislation on capital markets and its effective application and the protection of minority shareholders and corporate governance levels. In turn, the quality and control of these variables affect companies’ levels of external financing and have implications for the development of capital markets and the economy. Empirical evidence has demonstrated that in countries with underdeveloped capital markets, these benefits tend to be high. In Brazil, cross-country studies, such as Dyck and Zingales (2002) and Nenova (2003), found control premiums of 65% and 23%, respectively, for acquisition operations conducted during the 1990s. These authors are references in this field of study and later studies are based on their methodology and their findings (Souza et al, 2014; Ferraro and Rubino, 2017). As considerable changes have occurred in the Brazilian corporate scene, such as the new Brazilian Corporate Law (Nova Lei das S/As) and the introduction of special segments to BOVESPA’s corporate governance, it is necessary to further examine this issue. This work pretend determine the practiced control premium value in the Brazilian market involving publicly traded companies after these changes from 2004 to 2009, through regression analysis. The results demonstrates that the primary variable that relates to the control premium is the share control block, with an inverse relationship between increasing the control premium and the size of the control block acquired.