Multiple blockholder ownership and performance of companies: An empirical analysis

Mads Mourier

Student thesis: Master thesis


The aim of this thesis is to assess how multiple large shareholders (blockholders) affects the performance of companies. Basically the prediction is that dependent on different factors multiple blockholders might either work as a governance mechanism and cross monitor each other and other large shareholders or form coalitions with agendas which are not in line with maximization of shareholder value. With existing theory and previous research as the foundation I formulate a number of hypotheses regarding blockholder ownership and how performance of companies is affected. I use linear regression to test these hypotheses empirically on a sample of 5,829 companies from 17 countries with Tobin‟s Q and Return on Assets as proxies for performance. In my sample, the presence of multiple blockholders does not affect performance of companies significantly. However, dividing the sample in two sub samples with companies listed in countries with high levels of investor protection and low levels of investor protection, respectively, gives statistically significant results. In line with my hypothesis I find that in countries with low levels of investor protection multiple blockholders have positive effect on performance, whereas the effect on performance is negative is countries with high levels of investor protection. I also find the effect from multiple blockholders to be dependent on the identity of the largest blockholders when running regressions on the two sub samples divided on the basis of investor protection. As an example, the presence of a family among the largest blockholders turns out to have significantly positive effect on performance in countries with low investor protection and significantly negative effect in countries with high investor protection. I also find the number of blockholders, their total ownership share and concentration of the votes in the hands of blockholders to affect performance significantly, although these findings do not show a uniform picture. My findings furthermore show that in some cases a variable has positive effect on one of my performance measures and negative effect on the other. This suggests that in some cases a given variable has, for example, a positive effect on the operational performance of companies (ROA) whereas the market incorporates a risk premium in its valuation in the same case.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2010
Number of pages192