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REASONS FOR AND IMPLICATIONS OF THE PRESENCE OF INSTITUTIONAL INVESTORS IN THE OWNERSHIP STRUCTURE OF BRAZILIAN COMPANIES
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Lélis Pedro de Andrade 
, Aureliano Angel Bressan , Robert Aldo Iquiapaza , Wesley Mendes-Da-Silva
Abstract
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.
Keywords: Corporate Governance, Institutional Investor, Firm Value, Brazilian Stock Market
How to cite this paper: De Andrade, L. P., Bressan, A. A., Iquiapaza, R. A., & Mendes-Da-Silva, W. (2016). Reasons for and implications of the presence of institutional investors in the ownership structure of Brazilian companies. Corporate Ownership & Control, 13(4-4), 598-608. https://doi.org/10.22495/cocv13i4c4p9
