Portfolio Concentration and Firm Performance

62 Pages Posted: 17 Mar 2010 Last revised: 26 Jan 2015

See all articles by Anders G. Ekholm

Anders G. Ekholm

Priceff Ltd; Lappeenranta University of Technology (LUT); University of Helsinki

Benjamin Maury

Hanken School of Economics

Date Written: March 1, 2013


This paper investigates the relation between shareholders’ portfolio concentration and firm performance. Using data on more than 1.3 million unique shareholders, we create an index that measures how concentrated shareholder portfolios are in each firm. We posit that portfolio concentration will affect incentives when shareholders are resource constrained. We find that average shareholder portfolio concentration is significantly positively related to future operational performance and valuation. We also find that portfolio concentration is positively correlated with abnormal stock returns. Our findings suggest that shareholders with concentrated portfolios are more informed and play a governance role through the stock market.

Keywords: portfolio concentration, ownership concentration, governance through the stock market, profitability, valuation, stock returns

JEL Classification: G3

Suggested Citation

Ekholm, Anders G. and Maury, Benjamin, Portfolio Concentration and Firm Performance (March 1, 2013). Journal of Financial and Quantitative Analysis (JFQA), 2014, Vol. 49, issue 4 (August), pp. 903-931, Available at SSRN: https://ssrn.com/abstract=1572604 or http://dx.doi.org/10.2139/ssrn.1572604

Lappeenranta University of Technology (LUT) ( email )


University of Helsinki


Benjamin Maury (Contact Author)

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101

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