Ownership structure, Voting, and Risk

Dhillon, Amrita and Rossetto, Silvia (2015) Ownership structure, Voting, and Risk. Review of Financial Studies, vol.28 (n°2). pp. 521-560.

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Official URL: http://tse-fr.eu/pub/28624

Abstract

We analyze the determinants of a firm's ownership structure when decisions over risk are taken by majority vote of risk-averse shareholders. We show that when a fraction of small, diversified shareholders abstains from voting, mid-sized blockholders may emerge to mitigate the conflict of interests between one large shareholder, who prefers less risky investments, and these small, non-voting shareholders. The paper offers a novel explanation for the puzzling observation that many firms have multiple blockholders. The paper develops numerous empirical implications, for example on the link between ownership structure and risk choices and on the relative size of blocks.

Item Type: Article
Language: English
Date: February 2015
Refereed: Yes
JEL Classification: G11 - Portfolio Choice; Investment Decisions
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse), TSM Research (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:51
Last Modified: 30 Jan 2020 18:42
["eprint_fieldname_oai_identifier" not defined]: oai:tse-fr.eu:28624
URI: http://publications.ut-capitole.fr/id/eprint/16611

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