TY - JOUR
T1 - Do small shareholders count?
AU - Kandel, Eugene
AU - Massa, Massimo
AU - Simonov, Andrei
PY - 2011/9
Y1 - 2011/9
N2 - We hypothesize that age similarity among small shareholders acts as an implicit coordinating device for their actions and, thus, could represent an indirect source of corporate governance in firms with dispersed ownership. We test this hypothesis on a sample of Swedish firms during the 1995-2000 period. Consistent with our hypothesis, we find that compared with shareholders of differing ages, same-age noncontrolling shareholders sell more aggressively following negative firm news; firms with more age-similar small shareholders are more profitable and command higher valuation; and an increase (decline) in a firm's small shareholder age similarity brings a significantly large increase (decline) in its stock price. The last effects are more pronounced in the absence of a controlling shareholder.
AB - We hypothesize that age similarity among small shareholders acts as an implicit coordinating device for their actions and, thus, could represent an indirect source of corporate governance in firms with dispersed ownership. We test this hypothesis on a sample of Swedish firms during the 1995-2000 period. Consistent with our hypothesis, we find that compared with shareholders of differing ages, same-age noncontrolling shareholders sell more aggressively following negative firm news; firms with more age-similar small shareholders are more profitable and command higher valuation; and an increase (decline) in a firm's small shareholder age similarity brings a significantly large increase (decline) in its stock price. The last effects are more pronounced in the absence of a controlling shareholder.
KW - Corporate finance
KW - Firm value
KW - Managerial decision making
KW - Shareholder heterogeneity
UR - http://www.scopus.com/inward/record.url?scp=79960418054&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2011.03.018
DO - 10.1016/j.jfineco.2011.03.018
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AN - SCOPUS:79960418054
SN - 0304-405X
VL - 101
SP - 641
EP - 665
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 3
ER -