Prof. Andrei Simonov from the Stockholm School of Economics is giving a VGSF
research seminar on "Shareholder Homogeneity and Firm Value: The
Disciplining Role of Non-Controlling Shareholders" on FRIDAY, May 12th, from
15:30 to 17:00 at the Institute for Advanced Studies (Institut für Höhere
Studien, Stumpergasse 56, 1060 Wien), Lecture Room (HS) 2. Please find the
paper's abstract below.
Coffee and snacks are going to be available in the cafeteria of IHS, which
is located next to the lecture room, before and after the seminar.
Information regarding the further schedule of the VGSF research seminar can
be found at
www.vgsf.ac.at! Andrei is going to be available for discussions
on Thursday and Friday. If you would like to meet him, please let me know.
Best,
Michael Halling
Abstract
We study how the shareholding structure of a firm affects its stock price
and profitability. We argue that the degree of shareholder homogeneity
affects firm value. Homogeneous shareholders act as a disciplining device on
managers, inducing them to be more transparent and to engage less in value
destroying activities. This leads to higher firm profitability, higher stock
price and lower volatility. Shareholder homogeneity represents an
alternative and indirect source of corporate governance based on the stock
market. We test this hypothesis by using a dataset containing information on
all the shareholders for each firm in Sweden from 1995 to 2001. We construct
two proxies for shareholder homogeneity: the first is based on the age
cohort of the shareholders, and the second on their degree of college
interaction. For each firm, we measure the degree of homogeneity of all
shareholders. Using this proxy, we show that greater homogeneity increases
firm profitability and returns, and reduces analysts forecasting errors and
dispersion, and stock volatility.