What Might Drive Block Ownership In Canadian Firms? Evidence Through Count Data Models

Abstract

This paperaddresses the following crucial question: What might influence the decision of a blockholder to enteror exit a firm? Within a concentrated ownership context, such as Canada, we investigate impact of corporategovernance, firm’s risk, debt, liquidity and size on increase in number ofblockholders. This studycontributes to research topic by shedding light onendogeneity and dynamic nature of ownership structure. In order to take intoaccount discreteness of additional blockholders’ number, we used four CountData models, namely Poisson, Negative Binomial,Zero-Inflated Poisson, and Zero-Inflated Negative Binomial models. Ourfindings show that while excessive high level of risk, free cash-flow, firmsize, institutional and insiders’ ownership dissuade shareholders from gettinglarge stakes, moderately high levels of risk and firm leverage encourage themto join Blockholders’ list.