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RFS Advance Access originally published online on December 10, 2007
Review of Financial Studies 2009 22(4):1377-1408; doi:10.1093/rfs/hhm069
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© The Author 2007. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

The Myth of Diffuse Ownership in the United States

Clifford G. Holderness
Finance Department, Carroll School of Management, Boston College

Send correspondence to Clifford G. Holderness, Finance Department, Carroll School of Management, Boston College, 140 Commonwealth Ave., Chestnut Hill, MA 02467; telephone: 617-552-2768; e-mail: clifford.holderness.1{at}bc.edu.

JEL Classification: G32, G34


  Abstract

This article offers evidence on the ownership concentration at a representative sample of U.S. public firms. Ninety-six percent of these firms have blockholders; these blockholders in aggregate own an average 39% of the common stock. The ownership of U.S. firms is similar to and by some measures more concentrated than the ownership of firms in other countries. These findings challenge current thinking on a number of issues, ranging from the nature of the agency conflict in domestic corporations to the relationship between ownership concentration and legal protections for investors around the world.

I thank Stijn Claessens, Simeon Djankov, Mara Faccio, Larry Lang, Rafael La Porta, Karl Lins, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny for their data. I thank Melissa Go-Alcantara and Edward Shim for research assistance. This paper has benefited from the comments of an anonymous referee, Vladimir Atanasov, Michael Barclay, David Chapman, Art Durnev, Alex Edmans, Stuart Greenbaum, Darren Kisgen, Rafael La Porta, Jun Qian, Mark Roe, Dennis Sheehan, Matthew Spiegel, and seminar participants at Boston College, London Business School, the ACLE/JFI Conference on the Ownership of the Modern Corporation, the Annual Meeting of the Financial Research Association, and the Annual Meeting of the American Finance Association. Special thanks go to Jeffrey Pontiff for his steadfast encouragement and keen insights. Earlier versions of this paper circulated under the title "A Contrarian View of Ownership Concentration in the United States and Around the World."


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