Estimating the Effects of Large Shareholders Using a Geographic Instrument

Bo Becker, Henrik Cronqvist and Ruediger Fahlenbrach

No 10-028, Harvard Business School Working Papers from Harvard Business School

Abstract: Large shareholders may play an important role for firm performance and policies, but identifying this empirically presents a challenge due to the endogeneity of ownership structures. We develop and test an empirical framework which allows us to separate selection from treatment effects of large shareholders. Individual blockholders tend to hold blocks in public firms located close to where they reside. Using this empirical observation, we develop an instrument - the density of wealthy individuals near a firm's headquarters - for the presence of large, non-managerial individual shareholders in firms. These shareholders have a large impact on firms, controlling for selection effects.

Pages: 64 pages
Date: 2009-09, Revised 2010-02
New Economics Papers: this item is included in nep-ecm and nep-mic
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Estimating the Effects of Large Shareholders Using a Geographic Instrument (2011)
Working Paper: Estimating the Effects of Large Shareholders Using a Geographic Instrument (2011)
Working Paper: Estimating the Effects of Large Shareholders Using a Geographic Instrument (2008)
Working Paper: Estimating the Effects of Large Shareholders Using a Geographic Instrument (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:10-028

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