In this study we use direct estimates of the portfolio diversification of the largest shareholder in a firm to study the impact of shareholder diversification on the firm. For firms where the controlling shareholder is an individual, our tests indicate that the owner-managers use debt, dual class shares and corporate control transactions (merger activity) to strategically trade off corporate control and the drawback of poor portfolio diversification. However, for firms where the controlling shareholder is an institution, our results indicate that control but not diversification is important. Copyright 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.
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Volume (Year): 34 (2007-11) Issue (Month): 9-10 () Pages: 1470-1495 Download reference. The following formats are available: HTML
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