Family control, multiple institutional block-holders and informed trading

Zhang, Xiaoxiang, Piesse, Jenifer and Filatotchev, Igor (2015) Family control, multiple institutional block-holders and informed trading. The European Journal of Finance, 21 (10-11). pp. 826-847. ISSN 1351-847X

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Abstract

This 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

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HG Finance > HG4001 Finance management. Business finance. Corporation finance
Depositing User: Xiaoxiang Zhang
Date Deposited: 25 Jan 2013 07:49
Last Modified: 07 Mar 2017 06:24
URI: http://sro.sussex.ac.uk/id/eprint/43542

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