Leviathan as a minority shareholder
Subtitle: a study of equity purchases byt the Brazilian National Development Bank (BNDES), 1995-2003
By: Sergio G. Lazzarini, Aldo Musacchio
Contributors: Musacchio, Aldo; Harvard Business School
Series: Working paper / Harvard Business School -- 11-073; Working paper (Harvard Business School) -- 11-073.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 26
Subjects: Banco Nacional de Desenvolvimento Econômico e Social (Brazil)
Description: There is a growing literature comparing the performance of private vs. state-owned companies. Yet, there is little work examining the effects of having the government as a minority shareholder of private companies. We conduct such a study using data for 296 publicly-traded corporations in Brazil, looking at the effects of equity purchases by the National Bank for Economic and Social Development (BNDES) on firm performance between 1995 and 2003. Our fixed-effects regressions show that BNDES's purchases of equity lead to increases in return on assets and investment in fixed assets. Finally, we find that the positive effect of BNDES' equity purchases is reduced when the target firms belong to state-owned and private pyramidal groups. Therefore, our argue that having development banks owning minority stakes can have a positive effect on performance as long as they promote long-term investments and are shielded from governmental interference and potential minority shareholder expropriation.
Notes: "January 2011"--Publisher's website.

"Preliminary draft, December 2010"--added t.p.

Includes bibliographical references.