Large investors’ portfolio composition and firms value
(2020) In Journal of Corporate Finance 61.- Abstract
We analyze new Swedish data on the portfolio holdings of large blockholders and find that firm value increases with the weight of a stock in a large blockholder's portfolio. In our sample, this weight may be greater than 50%. We are the first to show that this value premium is correlated with portfolio weights for any large blockholders, not just institutions. We find some evidence that indicates that “stock importance” (high portfolio weight) can mitigate the negative effects of a dual-class structure on firm value. Further, it does not seem that a large blockholder's tenure as a CEO or as a board chairman affects this value premium. We conduct a variety of tests to rule out endogeneity and reverse causality.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/e85cb40e-68bd-460b-ac31-634222b8dbbb
- author
- Ravid, S. Abraham LU and Sekerci, Naciye LU
- organization
- publishing date
- 2020-04
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Blockholders, Dual-class shares, Portfolio composition, Stock importance
- in
- Journal of Corporate Finance
- volume
- 61
- article number
- 101404
- publisher
- Elsevier
- external identifiers
-
- scopus:85052939061
- ISSN
- 0929-1199
- DOI
- 10.1016/j.jcorpfin.2018.08.015
- language
- English
- LU publication?
- yes
- id
- e85cb40e-68bd-460b-ac31-634222b8dbbb
- date added to LUP
- 2018-10-22 14:23:51
- date last changed
- 2022-04-25 17:59:08
@article{e85cb40e-68bd-460b-ac31-634222b8dbbb, abstract = {{<p>We analyze new Swedish data on the portfolio holdings of large blockholders and find that firm value increases with the weight of a stock in a large blockholder's portfolio. In our sample, this weight may be greater than 50%. We are the first to show that this value premium is correlated with portfolio weights for any large blockholders, not just institutions. We find some evidence that indicates that “stock importance” (high portfolio weight) can mitigate the negative effects of a dual-class structure on firm value. Further, it does not seem that a large blockholder's tenure as a CEO or as a board chairman affects this value premium. We conduct a variety of tests to rule out endogeneity and reverse causality.</p>}}, author = {{Ravid, S. Abraham and Sekerci, Naciye}}, issn = {{0929-1199}}, keywords = {{Blockholders; Dual-class shares; Portfolio composition; Stock importance}}, language = {{eng}}, publisher = {{Elsevier}}, series = {{Journal of Corporate Finance}}, title = {{Large investors’ portfolio composition and firms value}}, url = {{http://dx.doi.org/10.1016/j.jcorpfin.2018.08.015}}, doi = {{10.1016/j.jcorpfin.2018.08.015}}, volume = {{61}}, year = {{2020}}, }