The Existence of Blockholders and Corporate Governance. Empirical Evidence from U.S.

Abstract

This paper investigates the role of blockholders within a firm. It studies the relationship between the number of blockholders and the share volatility of US listed firms. Controlling for potential endogeneity problems, it results that the number of blockholders affects positively share price volatility, but the reverse is not true. Furthermore, the largest blockholders differs from the one of the other blockholders. The largest blockholder limits the agency problems within a firm, while the number of blockholders affects volatility. Finally, firms with multiple blockholders show peculiar characteristics which show that multiple blockholders firm are not simply a mid-point between single blockholder firms and widely held firms indicating that multiple blockholders’ firms should be considered as a specific type.