Information Transfers among Coowned Firms

39 Pages Posted: 20 Mar 2011 Last revised: 27 Apr 2015

See all articles by Massimo Massa

Massimo Massa

INSEAD - Finance

Alminas Zaldokas

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Date Written: November 15, 2012


We study how information about one firm transmits to otherwise unrelated firms sharing the same major blockholder. Using information on US firms over the 2001–2008 period, we show that the financial conditions of these firms signal the controlling ability of the owner and therefore indirectly affects the quality of the firms in which the owner has a major stake. Bad news on credit quality in coowned firms raises the firm’s credit risk. Our results are robust to instrumental variables estimation where we instrument the changes in credit risk of coowned firms by the natural disaster events in the counties of coowned firm headquarters.

Keywords: information disclosure and transfer, blocks, cost of debt, comovement, bad news, market transparency

JEL Classification: G32, G33

Suggested Citation

Massa, Massimo and Zaldokas, Alminas, Information Transfers among Coowned Firms (November 15, 2012). AFA 2012 Chicago Meetings Paper, Available at SSRN: or

Massimo Massa

INSEAD - Finance ( email )

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Alminas Zaldokas (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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