Uncertainty awareness and corporate ownership concentration

This study develops a multi-dimensional framework to understand the relationship between investors' uncertainty awareness and ownership concentration behavior in countries where the capital markets are emerging, the information asymmetry among shareholders is high and the legal protection of minorities is weak. To test our hypotheses, we have built a dataset of 4,138 firms/year observations from seven Latin American countries. Our empirical analysis first shows that high ownership concentration continues to be a common pattern in Latin American firms and firms- specific uncertainty has a positive and robust effect on ownership concentration. Additionally, firms where the largest shareholder is a strategic blockholder have more concentrated ownership than institutional investors; the largest shareholder tends to transfer its home-country governance systems and the uncertainty of formal institutions and individuals willingness to uncertainty matter for understanding the behavior of ownership concentration.