Large Blockholders and Stock Price Crash Risk

27 Pages Posted: 2 Aug 2019

See all articles by Nicolas Eugster

Nicolas Eugster

University of Queensland - Business School; Catholic University of Lille - IESEG School of Management

Date Written: July 25, 2019


This paper examines the relationship between large blockholders and stock price crash risk for the entire population of non-financial companies listed on the Swiss Exchange for the period 2003-2016. The results show that firms held by a large blockholder have a lower firm-specific crash risk than widely held firms, and the higher the proportion of voting rights, the lower the crash risk. These findings hold after taking into consideration several firm characteristics and potential endogeneity concerns. Further analysis reveals that the mitigating effect of large blockholders on crash risk is stronger in firms held by the founding family, the state or another financial company. Overall, the evidence suggests that large shareholders serve as monitors in the company and help reducing bad news concealment, leading to lower stock price crash risk.

Keywords: Crash risk, large blockholder, ownership structure, information environment, monitor

JEL Classification: G14, G30, G32, M40

Suggested Citation

Eugster, Nicolas, Large Blockholders and Stock Price Crash Risk (July 25, 2019). Available at SSRN: or

Nicolas Eugster (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072

Catholic University of Lille - IESEG School of Management ( email )

3 rue de la Digue
Lille, Lille 59000

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