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Is Blockholder Diversity Detrimental?

Author

Listed:
  • Miriam Schwartz-Ziv

    (Business School, Hebrew University of Jerusalem and European Corporate Governance Institute, Jerusalem 9190500, Israel)

  • Ekaterina Volkova

    (Department of Finance, University of Melbourne, Parkville, Victoria 3053, Australia)

Abstract

We find that, overall, blockholder diversity, i.e., the firm shareholder base including several different types of blocks, is detrimental to firm performance. We show that lagged disclosure, on exogenous predetermined dates, that reveals an increase in block diversity is followed by a negative market reaction. Firms held by heterogeneous blockholders consistently perform worse than firms held by homogeneous blockholders. Block diversity is particularly detrimental when uncertainty is high. Disagreement among shareholders (e.g., as reflected in the frequency of lawsuits being filed) increases when the blockholder base is diverse. We make our blockholder data set public for the benefit of other researchers.

Suggested Citation

  • Miriam Schwartz-Ziv & Ekaterina Volkova, 2025. "Is Blockholder Diversity Detrimental?," Management Science, INFORMS, vol. 71(2), pages 1356-1390, February.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:2:p:1356-1390
    DOI: 10.1287/mnsc.2023.00528
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