Institutional Investors as Blockholders

16 Pages Posted: 17 Jun 2019

See all articles by Aviv Pichhadze

Aviv Pichhadze

affiliation not provided to SSRN

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Date Written: April 9, 2010


Pichhadze (2010) introduced the Market Oriented Blockholder Model (MOBM) as properly describing the ownership pattern in the American equity markets. Under the model, the emerging blockholder in the American equity markets is the institutional investor (II). This poses a challenge to the shareholder primacy literature, which argues that IIs (i) have interests that coincide with the interests of the shareholder body in the public firm, (ii) promote dispersed ownership, and (iii) crusade shareholder interests domestically and internationally. I show that (i) the position of IIs as blockholders creates a paradox for both the literature and the law, (ii) IIs have interests that do not coincide with those of other shareholders, and (iii) failure to recognize these observation vis-à-vis IIs or the MOBM may result in the introduction of a systemic risk into the financial system.

Keywords: Corporate Governance, Ownership, Institutional Investors, Block-holders, Regulation, Capital Markets

JEL Classification: K22, G23, G32, G34, G38

Suggested Citation

Pichhadze, Aviv, Institutional Investors as Blockholders (April 9, 2010). Osgoode CLPE Research Paper No. 13/2010, Available at SSRN: or

Aviv Pichhadze (Contact Author)

affiliation not provided to SSRN

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