The cost of multiple large shareholders

Charlie X. Cai, David Hillier, Jun Wang

Research output: Contribution to journalArticle

15 Citations (Scopus)

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.

LanguageEnglish
Pages401-430
Number of pages30
JournalFinancial Management
Volume45
Issue number2
Early online date1 Sep 2015
DOIs
Publication statusPublished - 30 Jun 2016

Fingerprint

Large shareholders
Costs
Multiple large shareholders
Shareholding
Firm value
Performance measures
Expropriation
Incentives
Prediction
Nonlinear relationships
Endogeneity
Model specification
Controlling shareholders
Firm performance

Keywords

  • firm value
  • shareholders
  • performance measurement

Cite this

Cai, Charlie X. ; Hillier, David ; Wang, Jun. / The cost of multiple large shareholders. In: Financial Management. 2016 ; Vol. 45, No. 2. pp. 401-430.
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The cost of multiple large shareholders. / Cai, Charlie X.; Hillier, David; Wang, Jun.

In: Financial Management, Vol. 45, No. 2, 30.06.2016, p. 401-430.

Research output: Contribution to journalArticle

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