Blockholders: a Survey of Theory and Evidence

The first, traditional channel is direct intervention in a firm’s operations, otherwise known as “voice.” These theories have motivated empirical research on the determinants and consequences of activism. The second, more recent channel is selling one’s shares if the manager underperforms, otherwise known as “exit.” These theories give rise to new empirical studies on the two-way relationship between blockholders and financial markets, linking corporate finance with asset pricing. We survey the empirical evidence on blockholder governance and close with suggestions for future research.