Voting Premium in the Brazilian Equity Market

Abstract

  This study aims to estimate the control premium in the Brazilian stock market, based on the dual-class price differential. We first show that the average control premium is positive from July 2003 to June 2013. This is in contrast with the extant findings in the literature, which indicate the presence of a voting discount. We then investigate the determinants of the difference in common and preferred share prices. In particular, we examine how the voting premium relates to the relative liquidity, the difference in dividends, the extension of tag along rights to non-voting shares, the issuance of ADR in the New York Stock Exchange, the level of corporate governance, the shareholders’ composition, and the government’s equity participation