Shareholders activism in the Brazilian capital Market: evidence and determinants of public companies
Name: LUIZ HENRIQUE FERNANDES VARGAS
Publication date: 20/09/2013
Advisor:
Name |
Role |
|---|---|
| PATRÍCIA MARIA BORTOLON | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| JOSE ELIAS FERES DE ALMEIDA | Internal Examiner * |
| PATRÍCIA MARIA BORTOLON | Advisor * |
Summary: This study aims at verifying the characteristics and determinants of shareholder activism in
public Brazilian companies. Shareholder activism means the attempt of shareholders to cause
alterations in the company, without changing its control structure, as defined by Gillan e
Starks (2007). The sample is made up of 322 companies for the year 2010 and 347 companies
for 2012. The study analyzed minutes of the ordinary meetings, media news on activism, and
complaints at the Brazilian Securities and Exchange Commission (CVM). In order to achieve
our goals and show shareholder activism in the sample, an index made up of seven questions
was employed, as well as logistic regression and multiple linear regression. The results show
the existence of shareholder activism expressed in the minutes through proposals made before
and during the meetings, opposing votes and refusal of proposals presented, as well as search
for representation in board of directors and audit committee through the election effective
members by minority shareholders. Evidence of shareholder activism was verified in news of
that period, mainly incorporation events and capital closing operations. Because of the interest
these events aroused in the media, the news about them were republished, which led to an
increase in the figures from one year to another. As far as the proceedings filed at the
Brazilian Securities and Exchange Commission are concerned, there was a decrease from
2010 to 2012, even though there was an increase in proceedings concerning measures
adopted by companys administrator and/or controller". The Shareholder Activism Index
showed the highest score for five of the seven questions for only two of the sample companies
in the study period. The chances of a company to target of activism are negatively affected by
return on equity and ownership concentration, and positively by firm size, board size , number
of proposals during meetings and quantity of shareholders; both individuals and corporations.
However, when using the variable number of individual shareholders, no statistical
significance was found for the model referring to complaints filed at CVM. For companies
that had been target of activism, multiple linear regression and activism measured by the
index showed that the company is negatively affected by leverage, and positively affected by
firm size and quantity of individual shareholders. Therefore, this study is a contribution the
literature on shareholder activism in the Brazilian stock market by showing the existence of
the former through methodology different from what had been used in international studies,
i.e. analyzing three aspects: meeting minutes, media news, and complaints filed at Brazilian
Securities and Exchange Commission. This variety of information allows verifying this
phenomenon that is frequently analyzed in international studies, but scarcely investigated in
the Brazilian market.
