Performance and Ownership Concentration in Brazil: Can the characteristics of the Boards of Directors interfere in this relationship?

Abstract

The aim of this research is to analyze the impact of characteristics of boards of directors on the relationship between business performance and ownership concentration. For this purpose, publicly traded non-financial Brazilian companies listed on Brazil, Bolsa, Balcão (B3) in the period between 2010 and 2020 were used as a sample. The survey data were extracted from the Economática database and the companies' Reference Forms on the website of the Brazilian Securities Commission (CVM). Performance was measured by the return on assets (ROA) and by the return on equity (ROE), while ownership concentration was measured by the percentage of participation of the largest, the three and five largest shareholders. The characteristics of the board of directors analyzed were the presence of independent directors, shared or with the accumulation of the functions of chairman of the board and executive director. The results showed that only board independence has a positive impact on the relationship between business performance and ownership concentration, which in practice may show that the relationship between performance and ownership concentration is influenced by elements intrinsic to boards of directors that can mitigate the expropriation of minority shareholders.