Determinants of ownership concentration in the Chilean stock market

This paper analyses econometrically the determinants of ownership concentration
in the Chilean stock market, paying particular attention to the effects of the Public
Tender Offer Act (Ley de Ofertas Públicas de Adquisición de Acciones). Although the
Public Tender Offer Act achieves its central purpose, the tender offer mechanism
increases the concentration of ownership, mainly because of the "residual tender
offer" obligation for which the Act provides. In addition, the study has found
significant opposite responses between the controlling shareholder and the next two
largest shareholders, which should sound a warning for international comparisons
based on a common measure of ownership concentration that do not take account
of the ownership structures characterizing Latin American markets. These aspects
must be considered if the regulatory goals aimed at by minority shareholder
protection bills are to be achieved.