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Large investors’ portfolio composition and firms value

Ravid, S. Abraham LU and Sekerci, Naciye LU (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:
author
and
organization
publishing date
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}},
}