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Family control, multiple institutional block-holders, and informed trading

Zhang, X., Piesse, J. & Filatotchev, I. (2015). Family control, multiple institutional block-holders, and informed trading. European Journal of Finance, 21(10-11), pp. 826-847. doi: 10.1080/1351847x.2012.696549


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.

Publication Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance in 2015, available online:
Publisher Keywords: ownership structure; family control; institutional block-holders; informed trading; Hong Kong
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments: Bayes Business School > Management
SWORD Depositor:
[thumbnail of CRO European_Journal_of_Finance_RR_3 IF.docx] Text - Accepted Version
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