Ownership Concentration and Corporate Performance of Brazilian Firms before and after Initial Public Offerings

Abstract

Objective: To evaluate the influence of ownership concentration on variation in corporate performance before and after initial public offerings (IPO) in firms launched on B3. Methods: Economic and financial information was obtained from the reference forms of 55 firms. Variation in performance was proxied by ROA and ROE two years before vs. two years after IPO. Ownership concentration was proxied by the proportion of shares with voting rights belonging to the single-largest, two largest, three largest, four largest or five largest shareholders. Originality/relevance: In addition to contributing to the literature, this is the first Brazilian study on the topic to analyze variation in performance before and after IPO, in light of the potential impact of IPO on firms. Results: Our results suggest that performance proxied by mean ROA and ROE tends to decrease in the post-IPO period. However, in our sample, ownership concentration did not significantly influence variation in corporate performance before and after IPO. Theoretical/methodological contribution: Based on our sample and the control variables used in the proposed econometric model, the presence of large controlling shareholders at the time IPO does not seem to influence the level of corporate performance following IPO, suggesting other factors are responsible for the observed behavior.