Analysis of why brazilian companies use preferred shares
DOI:
https://doi.org/10.14392/asaa.2025180205Keywords:
Ownership Structure, Dual-class Shares, Governance Code ReportAbstract
Objective: This research is based on Agency Theory and discusses the single-class share structure, which provides fewer rights deviations to shareholders. So, the objective was to investigate the justifications of Brazilian publicly traded companies for not adopting the "one share, one vote" principle.
Method: We analyzed 306 justifications from the Governance Code Report of companies listed on [B]³ with preferred shares, from 2018 to 2020, using manual coding and the MAXQDA software. Additionally, seven semi-structured interviews were conducted with representatives from the IR department and analyzed via MAXQDA.
Results: In the Report, companies justify their actions based on norms and regulations that allow the issuance of preferred shares (53%), while only 8% mention reasons for not adopting the principle, the main one being to maintain control. The interviews revealed new findings, showing that companies use preferred shares due to the difficulties and costs involved in adopting only common shares and there are also anticipated costs after the adoption of the practice. Furthermore, they declared that this structure favors long-term vision and maintenance of control. All companies declared no intention to adopt the principle and believe it is necessary to maintain preferred shares because some investors demand them.
Contribuitions: The research indicates that, in addition to reasons already discussed in the literature, there are other motives for companies to use preferred shares, contributing to providing more information to regulatory bodies, the market, and investors. For the Finance literature, the multimethod approach with semi-structured interviews generated relevant insights.
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Copyright (c) 2025 Poliana Maria Ramos, Patrícia Maria Bortolon, Marcelo Alvaro da Silva Macedo
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