Rossetto, Silvia, Selmane, Nassima and Stagliano, Raffaele (2022) Ownership concentration and firm risk: the moderating role of mid-sized blockholders. TSE Working Paper, n. 22-1346, Toulouse

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Abstract

This study analyzes the relationship between mid-sized blockholders and firm risk. We show that ownership structure matters for firm risk, beyond the first largest blockholder. Firms with multiple blockholders take more risk than firms with just one blockholder, even when controlling for the stake of the largest blockholder. Consistent with the diversification argument, we find that firm risk increases by 22% when the number of blockholders increases from one to two. Our results are robust to controlling for blockholder type and firm characteristics. We carry out various robustness checks to tackle endogeneity issues. More generally, we provide evidence that firms’ decisions are affected by mid-sized blockholders, and not merely the largest blockholder. This is in line with theoretical predictions.

Item Type: Monograph (Working Paper)
Language: English
Date: June 2022
Place of Publication: Toulouse
Uncontrolled Keywords: Corporate Governance, Ownership Structure, Firm Risk, Blockholders, Volatility of Operating Performance
JEL Classification: G11 - Portfolio Choice; Investment Decisions
G30 - General
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)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 22 Aug 2022 12:48
Last Modified: 01 Sep 2022 12:40
OAI Identifier: oai:tse-fr.eu:127065
URI: https://publications.ut-capitole.fr/id/eprint/45900
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