Title: The effect of control-ownership rights and business groups on cash holdings

Authors: Silvia Amélia Mendonça Flores; Igor Bernardi Sonza

Addresses: Federal University of Pampa, UNIPAMPA, Rua Barão do Triunfo, 1048, Santana do Livramento, RS, 97573-634, Brazil ORCID 0000-0002-0424-8375 ' Federal University of Santa Maria, UFSM, Av. Roraima, 1000, prédio 74C, Santa Maria, RS, 97105-900, Brazil ORCID 0000-0001-5403-3279

Abstract: The purpose of this paper is to investigate the influence of voting and cash flow rights deviations and group affiliation on the cash holdings of Brazilian companies. We employed a panel data analysis for 81 listed Brazilian firms during the period from 2010 to 2017, with Dynamic GMM-Sys. The results report that the greater the deviations between voting and cash flow rights, the higher is the cash holdings, probably related to future projects that provide private benefits. Controllers will have incentives to dispose of company resources (cash) for their interests, to the detriment of minority shareholders. The group affiliation is not a determinant of cash holdings in Brazil. The research brings new perspectives of complex organisational structures, such as companies with deviations of rights.

Keywords: cash holdings; voting rights; cash flow rights; deviations; business groups; Brazil.

DOI: 10.1504/IJEBR.2020.111098

International Journal of Economics and Business Research, 2020 Vol.20 No.4, pp.375 - 390

Received: 17 Jun 2019
Accepted: 18 Feb 2020

Published online: 21 Oct 2020 *

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