The Cost of Multiple Large Shareholders

Charlie X Cai; David Hillier; Jun Wang

doi:10.1111/fima.12090

journal article Sep 01, 2015

The Cost of Multiple Large Shareholders

Charlie X Cai David Hillier Jun Wang

Financial Management Vol. 45 No. 2 pp. 401-430 · Wiley

View at Publisher Save 10.1111/fima.12090

Abstract

Previous research argues that large noncontrolling shareholders enhance firm value because they deter expropriation by the controlling shareholder. We propose that the conflicting incentives faced by large shareholders may induce a nonlinear relationship between the relative size of large shareholdings and firm value. Consistent with this prediction, we present evidence that there are costs to having a second (and third) largest shareholder, especially when the largest shareholdings are similar in size. Our results are robust to various relative size proxies, firm performance measures, model specifications, and potential endogeneity issues.

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Details

Published: Sep 01, 2015
Vol/Issue: 45(2)
Pages: 401-430
License: View

Authors

Shenyang Pharmaceutical University

Cite This Article

Charlie X Cai, David Hillier, Jun Wang (2015). The Cost of Multiple Large Shareholders. Financial Management, 45(2), 401-430. https://doi.org/10.1111/fima.12090

The Cost of Multiple Large Shareholders

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