Ownership structure and market valuation of family groups in Chile

Abstract

In this paper I provide a summary description of corporate structure in Chilean firms and explain the evolution of conglomerates and capital markets in the Chilean economy. Specifically, I look at the control mechanisms and the identity of controllers of listed non-financial companies in Chile. Using a database developed by Lefort and Walker (2000, 2003b), I look at the relationship between family ownership and control and market valuation of listed firms in Chile. The evidence provided in this paper indicates, that in the case of the highly concentrated Chilean companies, family management of a company is associated to a market discount. This evidence is consistent with the hypothesis of imperfect correlation of talent across generations. However, as I explained earlier in the paper, most Chilean groups have less than 30 years of existence and therefore, the succession problem is not likely to be very important in Chile.