Large Shareholder Diversification and Corporate Risk-Taking
Top Cited Papers
- 2 August 2011
- journal article
- Published by Oxford University Press (OUP) in The Review of Financial Studies
- Vol. 24 (11), 3601-3641
- https://doi.org/10.1093/rfs/hhr065
Abstract
Using new data for the universe of firms covered in Amadeus, we reconstruct the portfolios of shareholders who hold equity stakes in private- and publicly traded European firms. We find great heterogeneity in the degree of portfolio diversification across large shareholders. Exploiting this heterogeneity, we document that firms controlled by diversified large shareholders undertake riskier investments than firms controlled by nondiversified large shareholders. The impact of large shareholder diversification on corporate risk-taking is both economically and statistically significant. Our results have important implications at the policy level because they identify one channel through which policy changes can improve economic welfare.Keywords
This publication has 40 references indexed in Scilit:
- Mixing family with business: A study of Thai business groups and the families behind themJournal of Financial Economics, 2008
- Shareholder Diversification and the Decision to Go PublicThe Review of Financial Studies, 2007
- Good Capitalism, Bad Capitalism, and the Economics of Growth and ProsperitySSRN Electronic Journal, 2007
- Founding‐Family Ownership, Corporate Diversification, and Firm LeverageThe Journal of Law and Economics, 2003
- Ferreting out Tunneling: An Application to Indian Business GroupsThe Quarterly Journal of Economics, 2002
- Finance and the sources of growthJournal of Financial Economics, 2000
- Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual InvestorsThe Journal of Finance, 2000
- Was Prometheus Unbound by Chance? Risk, Diversification, and GrowthJournal of Political Economy, 1997
- Managerial Incentives and Corporate Investment and Financing DecisionsThe Journal of Finance, 1987
- Risk Reduction as a Managerial Motive for Conglomerate MergersThe Bell Journal of Economics, 1981