Large Shareholder Diversification And Corporate Risk-Taking

Speaker:  Maria Teresa Marchica - Manchester Business School, University of Manchester
  Monday, March 22, 2010 at 12:30 PM Biblioteca DSE - Palazzina 32, ex Caserma Passalacqua

Using new data for the universe of firms covered in Amadeus, we reconstruct the equity 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 aimed at improving capital market development and diversification can improve economic welfare.
 

Documents
Title Format  (Language, Size, Publication date)
paper  pdfpdf (it, 368 KB, 22/03/10)

Programme Director
Angelo Zago

Publication date
January 21, 2010

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