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Set for Success? Minority Blockholders and Firm Value

Lindfors, Anton LU and Sjödin, Louise (2020) BUSN79 20201
Department of Business Administration
Abstract
The purpose of this study is to investigate the firm value effect of the relative voting power between the minority blockholders and the largest shareholder in firms, and the excess voting rights relative to capital rights for minority blockholders. The Holdings database was used to collect detailed ownership data on a sample of 266 listed Swedish firms corresponding to 1 781 firm-year while financial data were retrieved from Orbis. The empirical model was developed using an OLS regression, controlling for fixed effects and clustered standard errors. The results suggest that firm values are positively related to a more equal distribution of voting rights between the coalition of minority blockholders and the largest blockholder in the... (More)
The purpose of this study is to investigate the firm value effect of the relative voting power between the minority blockholders and the largest shareholder in firms, and the excess voting rights relative to capital rights for minority blockholders. The Holdings database was used to collect detailed ownership data on a sample of 266 listed Swedish firms corresponding to 1 781 firm-year while financial data were retrieved from Orbis. The empirical model was developed using an OLS regression, controlling for fixed effects and clustered standard errors. The results suggest that firm values are positively related to a more equal distribution of voting rights between the coalition of minority blockholders and the largest blockholder in the firm. Furthermore, we find indications that the excess votes of institutional minority blockholders are positively related to firm values, suggesting a novel interpretation of the entrenchment effect. Firm values may be enhanced when institutional minority blockholders carry excess votes in relation to their invested capital, since the excess votes increase their power of voice in monitoring the firm and other blockholders for a fixed level of investment. (Less)
Please use this url to cite or link to this publication:
author
Lindfors, Anton LU and Sjödin, Louise
supervisor
organization
course
BUSN79 20201
year
type
H1 - Master's Degree (One Year)
subject
keywords
Corporate Governance, Minority Blockholders, Firm Value, Voting Power, Excess Votes
language
English
id
9015926
date added to LUP
2020-08-21 14:08:58
date last changed
2020-08-21 14:08:58
@misc{9015926,
  abstract     = {{The purpose of this study is to investigate the firm value effect of the relative voting power between the minority blockholders and the largest shareholder in firms, and the excess voting rights relative to capital rights for minority blockholders. The Holdings database was used to collect detailed ownership data on a sample of 266 listed Swedish firms corresponding to 1 781 firm-year while financial data were retrieved from Orbis. The empirical model was developed using an OLS regression, controlling for fixed effects and clustered standard errors. The results suggest that firm values are positively related to a more equal distribution of voting rights between the coalition of minority blockholders and the largest blockholder in the firm. Furthermore, we find indications that the excess votes of institutional minority blockholders are positively related to firm values, suggesting a novel interpretation of the entrenchment effect. Firm values may be enhanced when institutional minority blockholders carry excess votes in relation to their invested capital, since the excess votes increase their power of voice in monitoring the firm and other blockholders for a fixed level of investment.}},
  author       = {{Lindfors, Anton and Sjödin, Louise}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Set for Success? Minority Blockholders and Firm Value}},
  year         = {{2020}},
}