Blockholders and Their Effect on Project Value: An Empirical Approach of Understanding Ownership Concentration and Firm Value Using an Event Study Framework
This study uses an event study framework to find the relationship between ownership concentration and project value. I find that project value first increases with ownership concentration when block size, the percentage ownership of the largest blockholder, is smaller than 10%, then declines with ownership concentration when block size gets larger, and finally rises again when block size exceeds 30%. However, my research only suggests an ambiguous relationship between ownership concentration and firm value. Additionally, ownership concentration seems to affect both the timing of market responses and the market’s interpretation of large investment projects.
