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Family Ownership and the Cost of Under Diversification
Uppsala University, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Faculty of Social Sciences, Department of Economics.
2008 (English)In: Applied Financial EconomicsArticle in journal (Refereed) Published
Abstract [en]

We argue that the cost to a family of holding a large block of shares in a company, or under diversifying, is reflected in the diversification benefits that the family forfeits. These costs can be substantial. For example, given a constant relative risk aversion parameter of two the median cost to our sample of families controlling large Swedish firms is 13% of the market value of firm’s shares. We find that this cost is reduced by pyramid structures but not by the use of dual class shares.

Place, publisher, year, edition, pages
URN: urn:nbn:se:uu:diva-13484OAI: oai:DiVA.org:uu-13484DiVA: diva2:41254
forthcomingAvailable from: 2008-01-23 Created: 2008-01-23 Last updated: 2011-01-11

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Holmén, Martin
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