The cost of multiple large shareholders

Charlie X. Cai, David Hillier, Jun Wang

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)
61 Downloads (Pure)


Previous research argues that large non-controlling shareholders enhance firm value because they deter expropriation by the controlling shareholder. We propose that the conflicting incentives faced by large shareholders may induce a nonlinear relationship between the relative size of large shareholdings and firm value. Consistent with this prediction, we present evidence that there are costs of having a second (and third) largest shareholder, especially when the largest shareholdings are similar in size. Our results are robust to various relative size proxies, firm performance measures, model specifications, and potential endogeneity issues.
Original languageEnglish
Pages (from-to)401-430
Number of pages30
JournalFinancial Management
Issue number2
Early online date1 Sep 2015
Publication statusPublished - 2 Jun 2016
Externally publishedYes


  • Multiple large shareholders
  • Firm value
  • Tobin’s Q
  • Non-controlling large shareholders
  • Monitoring
  • Collusion


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