Large shareholder diversification and corporate risk-taking

Arbeitspapier

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 non-diversified 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Manchester Business School Working Paper ; No. 618

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; International Financial Markets ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
• Subject: Risk-taking choices ; Large shareholders ; Portfolio diversification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Faccio, Mara ; Marchica, Maria-Teresa ; Mura, Roberto
• Event: Veröffentlichung
• (who): The University of Manchester, Manchester Business School
• (where): Manchester
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/102371
• Last update: 10.03.2025, 11:45 AM CET