University of Oulu

Fhe influence of blockholders on firm performance : evidence from Finland

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Author: Khan, Mohammed1
Organizations: 1University of Oulu, Oulu Business School, Department of Finance, Finance
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.2 MB)
Pages: 80
Persistent link:
Language: English
Published: Oulu : M. Khan, 2021
Publish Date: 2021-06-21
Thesis type: Master's thesis
Tutor: Conlin, Andrew
Reviewer: Sahlström, Petri
Conlin, Andrew


This thesis empirically tests if corporate ownership structure affects firm value focusing primarily on the firm’s large group of investors classified as blockholders. It initially examines if a mere presence of blockholder in a firm has an impact on firm performance. Additionally, it explores the impact of the largest shareholder on firm performance by splitting the largest shareholder into different groups using dummy variables to evaluate the performance of each group in contrast to non-blockholder. Besides, this study evaluates the firm performance when the fraction of the largest blockholder ownership is at least 50% to at most 50% of the firm’s shares. Finally, it estimates the impact of the multiple blockholders on firm value using three estimates applying three variables: 1. the number of blockholders, 2. the cumulative fraction of blockholder ownership, and 3.the Herfindahl Index.

Data and methodology- this thesis uses annual blockholder ownership and annual financial reporting data of 114 non-financial listed firms in the Helsinki Stock Exchange (NASDAQ Helsinki) for the 2017- 2020 period. We primarily use- the pooled OLS, and the random effects model for statistical analysis. But finally, we use the Fixed effects model with them to assess the concentration of ownership. This thesis utilizes Tobin’s q as a proxy to measure firm performance.

Findings-the study reveals that a mere presence of blockholder in a firm is negatively related to Tobin’s q. But the coefficient of the presence of blockholder is not statistically significant at 5% (P>0.05) significance level in any of the regression models. Furthermore, a large blockholder retaining at least (≥) 50% of the firm’s stock is negatively related to Tobin’s q and the coefficient is statistically significant at 5% (P≤0.05) significance level in the pooled OLS. Moreover, an increase in the number of blocks and in the cumulative ownership are significantly and negatively associated with Tobin’s q in the pooled OLS (P≤0.01), whereas in the random effects model, the coefficients are negative and significant at 5% (P≤0.05) and 1% (P≤0.01) significance level, respectively. Finally, it shows that the Herfindahl Index is negatively associated with lnTobin’s q, and the coefficient is statistically significant at 5% (P≤0.05) significance level in all three panel regression models.

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