Blockholders and Firm Performance within the Nordic Corporate Governance Model: Finnish Evidence

This paper examines the relationship between ownership concentration and firm performance within the Nordic corporate governance model. Using data on Finnish publicly listed companies (PLCs) during a period of economic growth and stability, we find that the ownership share of the largest owner is negatively related to Tobin’s Q . We posit that certain blockholders may exchange their active monitoring and control function of the management for the private benefits of control, which is an inherent risk of the Nordic Corporate Governance (NCG) model. We find that state ownership is negatively associated with Tobin’s Q , suggesting that government owners might promote politically desirable goals rather than create long-term
value for all shareholders. It is plausible that certain domestic blockholders render PLCs with a concentrated ownership structure less a!ractive to foreign investors.