NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Henrik Cronqvist

University of Miami
School of Business Administration
Department of Finance
5250 University Drive
Coral Gables, FL 33146
Tel: 305-515-5898

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NBER Working Papers and Publications

September 2011Estimating the Effects of Large Shareholders Using a Geographic Instrument
with Bo Becker, RĂ¼diger Fahlenbrach: w17393
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.

Published: Becker, Bo & Cronqvist, Henrik & Fahlenbrach, RĂ¼diger, 2011. "Estimating the Effects of Large Shareholders Using a Geographic Instrument," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(04), pages 907-942, September. citation courtesy of

 
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