The extent to which controlling shareholders or owners diversify portfolios is key to operating and financial strategies. An EU initiative is examining the impact of controlling shareholder diversification on firms' operating plans and outcomes.
Firms' controlling shareholder diversification contributes to their objective functions, especially risk taking. Strategies involving investment, quantity and price decisions as well as leverage and dividends influence profits. They also rely on the level of diversification of controlling shareholders.
Further details: Effects of owners' diversification on their companies