Is Blockholder Diversity Detrimental?

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Topic: Is Blockholder Diversity Detrimental?

Speaker: Ekaterina (Kate) Volkova, University of Melbourne

Abstract: We examine whether Block Diversity, i.e., a firm being held simultaneously by multiple types of blockholders, is detrimental to firm performance. Block ownership is frequently revealed around a random pre-specified date (Feb. 15), and we show that around such dates the market responds significantly more negatively when filings reveal that block ownership has become diverse. Moreover, firms held by heterogeneous blockholders consistently perform worse than firms held by homogeneous blockholders. These results prevail following exogenous shocks to block ownership—death/retirement of blockholders and outflows following the mutual fund scandal. These patterns may be explained by our finding that heterogeneous blockholders experience frequent disagreement: shareholders are more likely to sue the firm when heterogeneous blocks exist, and disagreement rates at shareholder votes are larger when blockholders are diverse. Our findings imply that Block Diversity is detrimental to performance and exacerbates disagreement.

Date: Wednesday, 11 September 2019
Time: 12.00 – 1.00 p.m.
Venue: University of Technology, Sydney
               Building 8, Room 08.002, Dr Chau Chak Wing Building
               Dr Chau Chak Wing Building
              14 - 28 Ultimo Road, Ultimo

Co-ordinator: Claire Liu  (Ph: +61 2 9514 7748)

Enquiries: Mala Kapahi (Ph: +61 2 9514 7777)

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Acknowledgement of Country

UTS acknowledges the Gadigal people of the Eora Nation, the Boorooberongal people of the Dharug Nation, the Bidiagal people and the Gamaygal people, upon whose ancestral lands our university stands. We would also like to pay respect to the Elders both past and present, acknowledging them as the traditional custodians of knowledge for these lands.