The Value of Stable Ownership During the Global Financial Crisis

We investigate the value of stable ownership for a large sample of European firms from 2005 to 2010, using the global financial crisis as an exogenous shock and using pre-and post-crisis periods as benchmarks. Controlling for ownership concentration, we find that stable blockholder ownership results in higher stock returns during the crisis, but not before and after the crisis. The positive effect of stable ownership applies to both family blockholders and institutional blockholders. While the beneficial effect of stable ownership generally does not depend on investor protection, stable institutional blockholders are more valuable in countries with weaker investor protection. During the financial crisis, ownership stability is also associated with lower idiosyncratic risk and higher investments.