Block-ownership structure, bank nominee director and crash-risk

Yogesh Chauhan, Kavita Wadhwa, Sudhakar Reddy Syamala, Abhinav Goyal*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


We study the effect of outside block-ownership on the future firm-specific crash-risk of Indian firms. Major and dedicated block-owners play a significant role in aggravating the firm's susceptibility towards crash-risk. Within a novel regulatory setup in India, where borrowing firms are entitled to a bank nominated board-member, we find an ancillary influence of bank nominee's presence in dissipating block-owners influence on firm-level crash-risk. These results support the monitoring hypothesis in alleviating future firm-level crash-risk. Our results are robust to alternate model specifications, different crash-risk and block-ownership measures, clustering, and an array of control variables.

Original languageEnglish
Pages (from-to)20-28
Number of pages9
JournalFinance Research Letters
Publication statusPublished - 1 Aug 2015

Bibliographical note

Publisher Copyright:
© 2015 Elsevier Inc.


  • Agency problem
  • Bank nominee
  • Block-ownership
  • Crash-risk

ASJC Scopus subject areas

  • Finance


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