Search

Looking at Brazilian privatisations between 1991 and 2018, we investigate how net privatisation prices react to restructuring policies that are implemented before the sale as well as to private ownership structures that emerge at the sale. We innovate by accounting for restructuring and ownership at the same time and also by exploring a unique dataset that covers 139 transactions, mainly built through fieldwork. The paper provides policymakers with a "do's and don'ts" checklist to extract higher value from the sale. The checklist can be used as a policy guideline for new privatisations in Brazil and potentially in other emerging economies. • An empirical study on net privatisation prices arising from auctions is conducted. • A unique dataset of Brazilian privatisations between 1991 and 2018 is explored. • Bidding strategies are sensitive to restructuring policies implemented before the sale. • Revenues react to private ownership structures that emerge at the sale. • Policy prescriptions for privatisations in emerging markets are proposed. [ABSTRACT FROM AUTHOR]

Prior research is not conclusive whether information asymmetries or managerial discretion are the cause of observed investment-cash flow sensitivity. This paper examines the effect of family firms' governance heterogeneity on firm's investment-cash flow sensitivity in Brazil. The Brazilian economic and corporate governance context present several idiosyncratic features, including weak minority shareholder protection, an underdeveloped capital market, macro-economic uncertainties, the presence of controlling shareholders (especially families), and the excessive use of control-enhancing mechanisms, allowing us to explore in greater detail the drivers of investment-cash flow sensitivity. We find that investment is more sensitive to cash flow for firms with a highly entrenched family presence (divergence between corporate control and voting rights coupled with family management) than in less entrenched family firms. This result emerges primarily due to financial constraints from asymmetric information, rather than agency problems of free cash flow from abuse of managerial discretion. Our findings shed new light on the role of excessive control rights in investment decisions, allowing family managers to reallocate capital to cope with financial constraints in times of economic uncertainties. • Family entrenched firms reduce the investment-cash flow sensitivity. • Entrenched owners are stewards in times of economic uncertainty. • Underinvestment due to information asymmetries seems to prevail. • There is no evidence of private benefits of control in family entrenched firms. [ABSTRACT FROM AUTHOR]

Abstract: This paper explores the financial performance of a mainstream socially responsible investment equity index in emerging markets: the Brazilian Corporate Sustainability Index. The results indicate that investors in emerging markets could accommodate their ethical values while at the same time not scarifying their overall portfolio performance in bullish market periods. However, the financial crisis led ethical investors to take a riskier and less profitable portfolio. These results seem to be due to socially responsible investment in Brazil that, as with other emerging markets, is highly influenced by social and institutional factors. [Copyright &y& Elsevier]