The Impact of Long-Term Block Shareholding

The Impact of Long-Term Block Shareholding by Financial Institutions on Corporate Performance

by

Sanjai Bhagat
University of Colorado at Boulder

Bernard Black
Columbia University School of Law

Margaret Blair
Brookings Institute

August 1996

Please address correspondence to: Sanjai Bhagat, Graduate School of Business, University of Colorado, Boulder, CO 80309-0419. Tel. (303) 492-7821. e-mail: bhagat@spot.colorado.edu

Abstract

This project is an exhaustive analysis of the impact of relationship investors (large-block shareholders who hold their stakes for a long time) on the performance of large U.S. corporations. The study tracks 1500 largest U.S. firms over the 1983-1993 period, and considers stock market and accounting based measures of performance. We plan to use these data to test whether there are identifiable and quantifiable differences in performance of public companies that can be attributed to relationship investors. We also categorize these investors as investment companies, pension funds, banks, and individuals, and test for differences in these sub-categories.