Economic Policy Review

A Survey of Blockholders and Corporate Control

April 2003Volume 9, Number 1
JEL classification: G30, G32

Author: Clifford G. Holderness

The author surveys the empirical literature on large-percentage shareholders in public corporations, focusing on four key issues: the prevalence of blockholders; the motivation for block ownership; the effect of blockholders on major corporate decisions, specifically executive compensation, leverage, and the incidence of takeovers; and the effect of blockholders on firm value. A central finding of this study is that there is little reason for policymakers or small investors to fear large-percentage shareholders in general, especially when the blockholders are active in firm management.

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