International Journal of Disclosure and Governance

, Volume 7, Issue 1, pp 70–91

What is the impact of bad governance practices in a concentrated ownership environment?


    • School of Economics, Management and Accounting of the University of São Paulo (FEA/USP)
  • Armando L DiasJr
Original Article

DOI: 10.1057/jdg.2009.21

Cite this article as:
da Silveira, A. & Dias, A. Int J Discl Gov (2010) 7: 70. doi:10.1057/jdg.2009.21


This article investigates the impact on share prices when news released on the specialized media indicates that the interests of controlling and minority shareholders groups diverge. Methodologically, we analyze 24 announcements of conflicts between shareholder groups in Brazil using two event study methodologies. We find strong support for our hypothesis that such news constitutes a proxy for relevant agency costs taking place, leading to a higher perception of risk and reduced share price. To our knowledge, this is the first article to estimate the impact of specific agency costs between controlling and minority shareholders in an environment characterized by concentrated ownership structures. The article is relevant for all capital markets' investors, as well as for analysts and other capital markets' agents. For policy makers and practitioners, our results provide evidence on the potential corporate value loss owing to conflicts between shareholders groups. As a result, they reinforce the argument for the adoption of good corporate governance practices, in order to avoid corporate value destruction resulting from problems between different shareholding groups. The main author is a professor at the School of Economics, Management and Accounting of University of São Paulo (FEA/USP) in Corporate Governance courses at both graduate and undergraduate level. In addition, he is Executive Coordinator of the Center for Corporate Governance Research of Fipecafi (CEG –, Vice-President of the Brazilian Society of Finance ( and Senior Researcher of the Brazilian Institute of Corporate Governance (IBGC – He is author of several books and articles on corporate governance, and writes a monthly column on corporate governance issues for Capital Aberto magazine, one of the most prominent capital markets' magazines in Brazil, making him well known among the corporate governance community in Brazil and Latin America. All persons involved with capital markets, media and policy makers should take note of these results, as most have corporate environments characterized by controlling shareholders, and their relationship with minority shareholders can be a potential source of relevant value destruction.


agency costscorporate governanceevent studycontrolling shareholdersminority shareholders

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© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2010