TY  - JOUR
AU  - Becker,Bo
AU  - Cronqvist,Henrik
AU  - Fahlenbrach,Rüdiger
TI  - Estimating the Effects of Large Shareholders Using a Geographic Instrument
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17393
PY  - 2011
Y2  - September 2011
UR  - http://www.nber.org/papers/w17393
L1  - http://www.nber.org/papers/w17393.pdf
N1  - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu

Henrik Cronqvist
Claremont McKenna College
Robert Day School of Economics and Finance
Bauer Center
500 E. 9th Street
Claremont, CA 91711
Tel: (909) 607-1732
E-Mail: henrik.cronqvist@claremontmckenna.edu

Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne (EPFL)
Quartier UNIL-Dorigny Bâtiment Extranef, # 211
1015 Lausanne
Switzerland
E-Mail: ruediger.fahlenbrach@epfl.ch
AB  - Large shareholders may play an important role for firm performance and policies, but identifying this empirically presents a challenge due to the endogeneity of ownership structures. We develop and test an empirical framework which allows us to separate selection from treatment effects of large shareholders. Individual blockholders tend to hold blocks in public firms located close to where they reside. Using this empirical observation, we develop an instrument – the density of wealthy individuals near a firm’s headquarters – for the presence of a large, non-managerial individual shareholder in a firm. These shareholders have a large impact on firms, controlling for selection effects.
ER  -