Publications
Publications
- 2009
- HBS Working Paper Series
Estimating the Effects of Large Shareholders Using a Geographic Instrument
By: Bo Becker, Henrik Cronqvist and Rudiger Fahlenbrach
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.
Keywords
Business Headquarters; Geographic Location; Corporate Governance; Governance Controls; Performance Effectiveness; Business and Shareholder Relations; Mathematical Methods
Citation
Becker, Bo, Henrik Cronqvist, and Rudiger Fahlenbrach. "Estimating the Effects of Large Shareholders Using a Geographic Instrument." Harvard Business School Working Paper, No. 10-028, October 2009. (Revised February 2010.)