TY  - JOUR
AU  - Holderness, Clifford G
AU  - Sheehan, Dennis P
TI  - Constraints on Large-Block Shareholders
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6765
PY  - 1998
Y2  - October 1998
DO  - 10.3386/w6765
UR  - http://www.nber.org/papers/w6765
L1  - http://www.nber.org/papers/w6765.pdf
N1  - Author contact info:
Clifford Holderness
Boston College
Finance Department
Fulton Hall 224C
Chestnut Hill, MA 02467
Tel: 617/552-2768
E-Mail: clifford.holderness.1@bc.edu

Dennis P. Sheehan
M1  - published as Clifford Holderness, Dennis P. Sheehan. "Constraints on Large-Block Shareholders," in Randall K. Morck, editor, "Concentrated Corporate Ownership" University of Chicago Press (2000)

AB  - Corporate managers who own a majority of the common stock in their company or who represent another firm owning such an interest appear to be less constrained than managers of diffusely held firms, yet their power to harm minority shareholders must be circumscribed by some organizational or legal arrangements. Empirical investigations reveal that boards of directors in majority-owned firms are little different from firms with diffuse stock ownership.  Another source of constraints on a majority shareholders -- capital market activity -- also appears to be no different from firms with diffuse ownership.  Finally, there is little evidence that new organizational mechanisms have evolved to constrain managers who own large blocks of stock.  The frequency and associated wealth effects of reorganizations of majority shareholder firms, however, indicate that the law constrains managerial majority shareholders, both in their day-to-day management and when they redeem the ownership interest of minority shareholders.
ER  -