Large Blocks of Stock: Prevalence, Size, and Measurement
Virginia Polytechnic Institute & State University - Department of Finance, Insurance, and Business Law
Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute
Paul A. Gompers
Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
Yale School of Management; National Bureau of Economic Research (NBER)
NBER Working Paper No. w10671
Large blocks of stock play an important role in many studies of corporate governance and finance. Despite this important role, there is no standardized data set for these blocks, and the best available data source, Compact Disclosure, has many mistakes and biases. In this paper, we document these mistakes and show how to fix them. The mistakes and bias tend to increase with the level of reported blockholdings: in firms where Compact Disclosure reports that aggregate blockholdings are greater than 50 percent, these aggregate holdings are incorrect more than half the time and average holdings for these incorrect firms are overstated by almost 30 percentage points. We also demonstrate that our fixes are economically and statistically significant in an analysis of the relationship between firm value and outside blockholders.
Number of Pages in PDF File: 29working papers series
Date posted: September 2, 2004
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