Acquirer ownership concentration and foreign ownership structure: A study of Brazilian firms

摘要

Weak governance conditions prevailing in emerging and developing economies tend to encourage concentrated over diffused ownership structures in firms. In this paper we investigate whether the ownership structures in the home market are also replicated in the foreign subsidiaries or are subject to other factors. We contend that firms with concentrated ownership structures in emerging economies tend to prefer partial over absolute ownership in the foreign subsidiaries. This preference is more pronounced in investing firms who are affiliated to business groups. An examination of 317 cross-border acquisitions by Brazilian acquiring firms in different host countries suggests that acquirer ownership concentration, business group affiliation as well as the joint effects of the two factors all appear to be correlated with lower equity ownership in the foreign target firm.