This article draws upon and summarizes the findings of “The Myth of Diffuse Ownership in the United States,” which was published in the Review of Financial Studies, Volume 23, 2009. Please address correspondence to Clifford G. Holderness, Carroll School of Management, Boston College, Chestnut Hill, MA 02467, or e-mail: email@example.com.
Blockholders Are More Common in the United States Than You Might Think*
Article first published online: 23 DEC 2010
Copyright © 2010 Morgan Stanley
Journal of Applied Corporate Finance
Volume 22, Issue 4, pages 75–85, Fall 2010
How to Cite
Holderness, C. G. (2010), Blockholders Are More Common in the United States Than You Might Think. Journal of Applied Corporate Finance, 22: 75–85. doi: 10.1111/j.1745-6622.2010.00303.x
- Issue published online: 23 DEC 2010
- Article first published online: 23 DEC 2010
Finance scholars have long characterized the large publicly traded U.S. company as having a fragmented ownership structure with a diffuse shareholder base—significantly more diffuse than comparable companies in most other countries. But the findings of the author's recent study, which incluudes large amounts of “hand-collected data” on the share ownership of U.S. companies, are strikingly at odds with this characterization.
As reporteed in the study, 96% of a sample of 375 randomly chosen, publicly traded U.S. corporations—including companies like American Express and McDonald's—had at least one shareholder who owned at least 5% of the firm's common stock. In fact, such blockholders as a group owned almost 40% of the typical U.S. company. There was, to be sure, an inverse relation between ownership concentration and firm size, but ownership was unexpectedly concentrated even among the largest companies, with 89% of the S&P 500 companies in the sample having at least one 5% blockholder.
What's more, the ownership concentration of U.S. public companies turned out to be remarkably similar to the average ownership concentration of large samples of listed companies from 22 European and East Asian countries. More specifically, the ownership structure of U.S. companies—after controlling for differences in company size—appears to all in the middle of the distribution of those countries, whether one looks at the proportion of companies with block-holders or the blockholders' average percentage holdings.