Blockholder Dispersion and Firm Value

Sander J.J. Konijn, Roman Kraeussl and Andre Lucas
Additional contact information
Sander J.J. Konijn: VU University Amsterdam
Roman Kraeussl: VU University Amsterdam
Authors registered in the RePEc Author Service: Roman Kräussl

No 09-113/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in a publication in the Journal of Corporate Finance (2011). Vol. 17, issue 5, 1330-1339.

This paper analyzes the impact of blockownership dispersion on firm value. Blockholdings by multiple blockholders is a widespread phenomenon in the U.S. market. It is not clear, however, whether dispersion among blockholder is preferable to having a more concentrated ownership structure. To test for the direction of the effect, we use a large dataset of U.S. firms that combines blockholder information, shareholder rights information, debt ratings, accounting information, and financial markets information. We find that a large fraction of aggregated block ownership negatively affects Tobin's Q. The negative impact is larger if blockowners are more dispersed, suggesting that a concentrated ownership structure is to be preferred on average. Results are robust to controlling for blockholder type as well as proxies for shareholder rights. Our empirical findings are also confirmed if we study the impact of ownership dispersion on firm debt ratings rather than Tobin's Q.

Keywords: corporate governance; ownership structure; multiple blockholders; firm value (search for similar items in EconPapers)
JEL-codes: G3 G32 (search for similar items in EconPapers)
Date: 2009-12-14, Revised 2011-01-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (64)

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Related works:
Journal Article: Blockholder dispersion and firm value (2011)
Working Paper: Blockholder dispersion and firm value (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20090113

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