Large Shareholder Diversification and Corporate Risk-Taking

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ID: 305947
2011
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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.
Reference Key
openalex_W3022248576 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Mara Faccio, Maria‐Teresa Marchica, Roberto Mura
Journal review of financial studies
Year 2011
DOI
10.1093/rfs/hhr065
URL
https://doi.org/10.1093/rfs/hhr065
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