Large Shareholders with Diversified Equity Portfolios and Voluntary Disclosure: International Evidence

61 Pages Posted: 22 Dec 2016 Last revised: 13 Jan 2018

See all articles by Herita T. Akamah

Herita T. Akamah

University of Nebraska at Lincoln - School of Accountancy

Sydney Qing Shu

Miami University of Ohio - Department of Accountancy

Date Written: December 15, 2017

Abstract

Motivated by a growing interest in the governance role of large shareholders with diversified equity portfolios, we examine the effect of diversified large shareholders on voluntary corporate disclosures. With substantial equity stakes, large shareholders generally have more access to private information about portfolio firms relative to small shareholders. We suggest that diversified portfolios reduce the net benefits of exploiting private information, thereby prompting large shareholders to rely on public disclosures to monitor management. Using a sample of large shareholders worldwide, we document a positive association between large shareholder portfolio diversification and the availability of voluntary disclosures (management forecasts, conference presentations, analyst/investor days). However, this positive association is less evident in countries with weaker information technology infrastructure and in countries with more secretive national culture. Overall, our evidence suggests that diversified large shareholders generate a positive externality of lowering monitoring costs for all stakeholders through enhancing disclosure environment transparency.

Keywords: Large shareholder; portfolio diversification; voluntary disclosure; information technology infrastructure; secrecy culture; investor relations; positive externality

Suggested Citation

Akamah, Herita T. and Shu, Sydney Qing, Large Shareholders with Diversified Equity Portfolios and Voluntary Disclosure: International Evidence (December 15, 2017). Available at SSRN: https://ssrn.com/abstract=2888157 or http://dx.doi.org/10.2139/ssrn.2888157

Herita T. Akamah (Contact Author)

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Sydney Qing Shu

Miami University of Ohio - Department of Accountancy

3094 Farmer School of Business
800 E. High St.
Oxford, OH 45056
United States

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