Ownership Dynamics and Firm Policies with a Large Shareholder

Sebastian Gryglewicz, Simon Mayer and Erwan Morellec

No 21226, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a dynamic theory of large shareholders and firm policies, where a blockholder engages with the firm to improve asset productivity and influence decisions on investment, financing, and executive compensation. In equilibrium, the blockholder’s ownership stake may grow or shrink over time driven by gains from trade that result from the relationship between ownership, corporate policies, and control. A feedback loop emerges: as the blockholder increases their ownership, it boosts investment and the firm's debt capacity, while higher returns from debt and investment incentivize the blockholder to increase their stake. While firm policies need not maximize dispersed shareholder value when the blockholder is in control, limiting blockholder influence ultimately reduces blockholder ownership and firm value.

Keywords: Activism (search for similar items in EconPapers)
Date: 2026-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21226 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21226

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21226

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().