Blockholders Heterogeneity : Evidence from Stockholm Stock Exchange

Sammanfattning: Using the empirical framework of Cronqvist and Fahlenbrach (2007); I analyze the effects of heterogeneity across blockholders based on a blockholder-firm panel data set that tracks all unique blockholders among listed firms on the Stockholm Stock Exchange. The results show evidence of significant blockholders’ fixed effects in investment and financial policies. These effects are also economically important and they drive a significant effect on firm performance. I also analyzed sources of the heterogeneity, more particularly the block size, the holding period and the diversification level and I find that blockholders with larger block size, longer holding period and/or higher level of diversification are associated with larger effects on corporate policies and firm performance. Finally, I focused on determining the origin of the blockholders fixed effects; the results show that the effects are rather consistent with the influence hypothesis: Blockholders seem to influence decisions when they invest rather than select firms that have policies consistent with their beliefs.