Is Blockholder Diversity Detrimental?

Miriam Schwartz-Ziv () and Ekaterina Volkova ()
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Miriam Schwartz-Ziv: Business School, Hebrew University of Jerusalem and European Corporate Governance Institute, Jerusalem 9190500, Israel
Ekaterina Volkova: Department of Finance, University of Melbourne, Parkville, Victoria 3053, Australia

Management Science, 2025, vol. 71, issue 2, 1356-1390

Abstract: We find that, overall, blockholder diversity, i.e., the firm shareholder base including several different types of blocks, is detrimental to firm performance. We show that lagged disclosure, on exogenous predetermined dates, that reveals an increase in block diversity is followed by a negative market reaction. Firms held by heterogeneous blockholders consistently perform worse than firms held by homogeneous blockholders. Block diversity is particularly detrimental when uncertainty is high. Disagreement among shareholders (e.g., as reflected in the frequency of lawsuits being filed) increases when the blockholder base is diverse. We make our blockholder data set public for the benefit of other researchers.

Keywords: blockholders; blocks; block diversity; financial performance; lawsuits; shareholder votes (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:2:p:1356-1390

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