Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102371
Authors: 
Faccio, Mara
Marchica, Maria-Teresa
Mura, Roberto
Year of Publication: 
2011
Series/Report no.: 
Manchester Business School Working Paper 618
Abstract: 
Using new data for the universe of firms covered in Amadeus, we reconstruct the portfolios of shareholders who hold equity stakes in private and publicly-traded European firms. We find great heterogeneity in the degree of portfolio diversification across large shareholders. Exploiting this heterogeneity, we document that firms controlled by diversified large shareholders undertake riskier investments than firms controlled by non-diversified large shareholders. The impact of large shareholder diversification on corporate risk-taking is both economically and statistically significant. Our results have important implications at the policy level because they identify one channel through which policy changes can improve economic welfare.
Subjects: 
Risk-taking choices
Large shareholders
Portfolio diversification
JEL: 
G11
G15
G31
Document Type: 
Working Paper

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