When Blockholders Leave Feet First: Do Ownership and Control Affect Firm Value?

37 Pages Posted: 28 Jun 2013

See all articles by Bang Dang Nguyen

Bang Dang Nguyen

University of Cambridge Judge Business School

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance; Hong Kong University of Science & Technology (HKUST) - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 26, 2013

Abstract

This study investigates the effect of ownership and control on firm value using exogenous variation resulting from stock price reactions to the sudden death of individual blockholders. Stock market reactions range from -5% to 4% for inside blockholders as ownership increases and from 0% to -2% for outside blockholders. The difference in market reactions identifies the value of ownership and control while effectively controlling for confounding effects on firm value due to liquidity or anticipated takeover activity. Overall, our results suggest that as ownership increases the beneficial effect of inside blockholders disappears while the beneficial effect of outside blockholders increases.

Keywords: Ownership Concentration, Blockholder, Firm Value, Corporate Control, Sudden Death, Corporate Governance

JEL Classification: G3, G30

Suggested Citation

Nguyen, Bang Dang and Nielsen, Kasper Meisner, When Blockholders Leave Feet First: Do Ownership and Control Affect Firm Value? (June 26, 2013). Available at SSRN: https://ssrn.com/abstract=2285453 or http://dx.doi.org/10.2139/ssrn.2285453

Bang Dang Nguyen (Contact Author)

University of Cambridge Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 122 376 0470 (Phone)
+44 1223 339701 (Fax)

HOME PAGE: http://www.jbs.cam.ac.uk/research/faculty/nguyenbd.html

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000
Denmark

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

Clear Water Bay, Kowloon
Hong Kong

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