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Blockholder dispersion and firm value

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  • Konijn, Sander J. J.
  • Kräussl, Roman
  • Lucas, André

Abstract

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.

Suggested Citation

  • Konijn, Sander J. J. & Kräussl, Roman & Lucas, André, 2010. "Blockholder dispersion and firm value," CFS Working Paper Series 2010/05, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:201005
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    More about this item

    Keywords

    Corporate Governance; Ownership Structure; Multiple Blockholders; Firm Value;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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