Ownership Dynamics and Firm Policies with a Large Shareholder

About the seminar

We develop a theory of large shareholder ownership and firm policies, in which a blockholder dynamically adjusts their ownership stake over time, thereby shaping their level of engagement and the firm’s decisions. We analytically characterise the dynamic trading strategy of the blockholder and the firm’s financing, investment and compensation policies, assuming no commitment from the blockholder. In equilibrium, the large shareholder may increase or decrease their stake over time, potentially leading to exit or a full takeover. While limiting blockholder control may benefit dispersed shareholders in the short term, it ultimately leads to reduced ownership and engagement by the blockholder, lowering firm value over the long run.

Speaker bio

Sebastian Gryglewicz is a Professor of Finance at Erasmus University Rotterdam and a Research Fellow at Tinbergen Institute. He conducts research in corporate finance and financial intermediation. His recent research focuses on activist investors, private equity, managerial incentives and mergers & acquisitions. His work has been published in top-tier journals, including the Journal of Finance, the Journal of Financial Economics and the Review of Financial Studies.

Register

No registration required. For any queries about the seminar, please contact Bet Brooke.