Block Diversity and Governance

Ryan Israelsen; Miriam Schwartz-Ziv; James Weston

doi:10.1093/rcfs/cfaf011

Block Diversity and Governance

Ryan Israelsen
, Miriam Schwartz-Ziv^*
, James Weston

^*Corresponding author for this work

BA Business Department

Research output: Contribution to journal › Article › peer-review

Abstract

Governance practices differ significantly across blockholder types. Compared with financial blockholders, nonfinancial blockholders are six times more likely to identify as activists. A textual analysis of regulatory filings shows that nonfinancial blocks govern through customized governance actions, while financial blocks follow generic performance metrics. Furthermore, blockholdings drive an important limitation in using Russell index thresholds as an identification strategy. Manipulation of index weights by Russell is strongly correlated with nonfinancial block ownership, confounding previous research on passive ownership. Using both reduced-form and structural estimates, we find that the market expects greater value creation from the entry of a nonfinancial blockholder.

Original language	English
Pages (from-to)	748-797
Number of pages	50
Journal	Review of Corporate Finance Studies
Volume	15
Issue number	3
DOIs	https://doi.org/10.1093/rcfs/cfaf011
State	Published - Aug 2026

Bibliographical note

Publisher Copyright:
© The Author(s) 2025. Published by Oxford University Press on behalf of The Society for Financial Studies. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs licence (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial reproduction and distribution of the work, in any medium, provided the original work is not altered or transformed in any way, and that the work is properly cited. For commercial re-use, please contact [email protected] for reprints and translation rights for reprints. All other permissions can be obtained through our RightsLink service via the Permissions link on the article page on our site—for further information please contact [email protected].

Keywords

G23
G30
G34
G39

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10.1093/rcfs/cfaf011

Cite this

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title = "Block Diversity and Governance",

abstract = "Governance practices differ significantly across blockholder types. Compared with financial blockholders, nonfinancial blockholders are six times more likely to identify as activists. A textual analysis of regulatory filings shows that nonfinancial blocks govern through customized governance actions, while financial blocks follow generic performance metrics. Furthermore, blockholdings drive an important limitation in using Russell index thresholds as an identification strategy. Manipulation of index weights by Russell is strongly correlated with nonfinancial block ownership, confounding previous research on passive ownership. Using both reduced-form and structural estimates, we find that the market expects greater value creation from the entry of a nonfinancial blockholder.",

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author = "Ryan Israelsen and Miriam Schwartz-Ziv and James Weston",

note = "Publisher Copyright: {\textcopyright} The Author(s) 2025. Published by Oxford University Press on behalf of The Society for Financial Studies. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs licence (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial reproduction and distribution of the work, in any medium, provided the original work is not altered or transformed in any way, and that the work is properly cited. For commercial re-use, please contact [email protected] for reprints and translation rights for reprints. All other permissions can be obtained through our RightsLink service via the Permissions link on the article page on our site{\textemdash}for further information please contact [email protected].",

year = "2026",

month = aug,

doi = "10.1093/rcfs/cfaf011",

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Block Diversity and Governance

Abstract

Bibliographical note

Keywords

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