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Family control, multiple institutional block-holders and informed trading
journal contribution
posted on 2023-06-08, 14:16 authored by Xiaoxiang ZhangXiaoxiang Zhang, Jenifer Piesse, Igor FilatotchevThis paper investigates how large family shareholders and institutional block-holders jointly influence informed trading and firm valuation in the Hong Kong stock market. It combines market microstructure research with studies on the governance roles of multiple block-holders and finds that institutional block-holders rely on their relative controlling power vis-à-vis family owners to mitigate problems associated with informed trading. They also use their ownership rights to improve the structure of informed trading. However, these governance roles are predominantly exercised by pressure-resistant institutional block-holders. Informed trading reduces firm valuation, while an improvement in its structure increases valuation. Therefore, the governance roles of controlling families and pressure-resistant institutional block-holders may have different implications in terms of investors’ perceptions of private information risk
History
Publication status
- Published
Journal
The European Journal of FinanceISSN
1351-847XPublisher
Taylor & FrancisExternal DOI
Issue
10-11Volume
21Page range
826-847Department affiliated with
- Business and Management Publications
Full text available
- No
Peer reviewed?
- Yes