Portfolio concentration and firm performance

Benjamin Maury; Anders Ekholm

doi:10.1017/S0022109014000635

Portfolio concentration and firm performance

Benjamin Maury, Anders Ekholm

Finance, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

23 Citations (Scopus)

Abstract

This paper investigates the relation between shareholders’ portfolio concentration and firm performance. Using data on more than 1.3 million unique shareholders, we create an index that measures how concentrated shareholder portfolios are in each firm. We posit that portfolio concentration will affect incentives when shareholders are resource constrained. We find that average shareholder portfolio concentration is positively related to future operational performance and valuation. We also find that portfolio concentration is positively correlated with abnormal stock returns. Our findings suggest that shareholders with concentrated portfolios are more informed and play a governance role through the stock market.

Original language	English
Peer-reviewed scientific journal	Journal of Financial and Quantitative Analysis
Volume	49
Issue number	4
Pages (from-to)	903-931
Number of pages	29
ISSN	0022-1090
DOIs	https://doi.org/10.1017/S0022109014000635
Publication status	Published - 01.08.2014
MoE publication type	A1 Journal article - refereed

Keywords

511 Economics
portfolio concentration, ownership concentration, governance through the stock market, profitability, valuation, stock returns
512 Business and Management
KOTA2014

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Shareholder Activity and Corporate Performance
Maury, B. (Project manager, academic), Ekholm, A. (Project participant), Liljeblom, E. (Project participant) & Löflund, A. (Project participant)
01.01.2007 → 28.02.2013
Project: Externally funded project

Cite this

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Portfolio concentration and firm performance

Abstract

Keywords

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Shareholder Activity and Corporate Performance

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