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Lopes, A. I., Lourenço, I., Soliman, M. T. & Branco, M. (2021). Is the relation between non-controlling interests and parent companies misleading?. Australian Journal of Management. 46 (1), 24-50
A. I. Lopes et al., "Is the relation between non-controlling interests and parent companies misleading?", in Australian Journal of Management, vol. 46, no. 1, pp. 24-50, 2021
@article{lopes2021_1732407119265, author = "Lopes, A. I. and Lourenço, I. and Soliman, M. T. and Branco, M.", title = "Is the relation between non-controlling interests and parent companies misleading?", journal = "Australian Journal of Management", year = "2021", volume = "46", number = "1", doi = "10.1177/0312896219896388", pages = "24-50", url = "https://journals.sagepub.com/doi/full/10.1177/0312896219896388" }
TY - JOUR TI - Is the relation between non-controlling interests and parent companies misleading? T2 - Australian Journal of Management VL - 46 IS - 1 AU - Lopes, A. I. AU - Lourenço, I. AU - Soliman, M. T. AU - Branco, M. PY - 2021 SP - 24-50 SN - 0312-8962 DO - 10.1177/0312896219896388 UR - https://journals.sagepub.com/doi/full/10.1177/0312896219896388 AB - This article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts. ER -