Patterns of Efficiency in Dispersed, Dominant and Concentrated Ownership Structures in Brazil

Abstract

Purpose: The article aims to trace the behaviour of dispersed, dominant and concentrated ownership structures in Brazil and verify which of these structures is more efficient operationally and if there is a pattern to be followed. Originality/gap/relevance/implications: Static optimisation techniques are used by data envelopment analysis (DEA) to calculate the variable ‘efficiency', a differential in relation to previous studies that consider only outcome variables as a performance indicator. The article is one of the first in the area that traces the pattern of efficiency of ownership structures in Brazil. Key methodological aspects: The sample consists of 8,298 company years in the period between 1995 to 2012. To calculate the efficiency (dependent variable), static optimisation techniques were used by data envelopment analysis (DEA). After, the unbalanced panel data by GMM-Sys (system generalised method of moments) is applied to identify the influence of dispersed, dominant and concentrated ownership structures on efficiency. Summary of key results: The results showed that, although all the variables are positively related to efficiency, the graphic presented an inverted "U" format, i.e. dispersed and concentrated structures, mostly, are less efficient than dominant. Key considerations/conclusions: The study identifies that both agency problems and the expropriation of minority shareholders by the majority, stemming from weak legal protection in the country, significantly affect the efficiency of Brazilian companies, thus making dominant structures the most appropriated form of ownership structure in Brazil.