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.
Corporate Governance; Ownership Structure; Firm Risk; Blockholders; Volatility of Operating Performance;
- G11: Portfolio Choice • Investment Decisions
- G30: General
- G32: Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill
- G34: Mergers • Acquisitions • Restructuring • Corporate Governance
Silvia Rossetto, Nassima Selmane, and Raffaele Staglianò, “Ownership concentration and firm risk: The moderating role of mid-sized blockholders”, Journal of Business Finance and Accounting, 2022, forthcoming.
Silvia Rossetto, Nassima Selmane, and Raffaele Staglianò, “Ownership concentration and firm risk: The moderating role of mid-sized blockholders”, TSE Working Paper, n. 22-1346, June 2022.
TSE Working Paper, n. 22-1346, June 2022