Corporate control and M&A activity: the role of the largest shareholder’s voting stake

This study finds a negative relationship between the voting stake of the largest shareholder and M&A likelihood, utilizing a large sample of 814 publicly listed firms. We argue that large shareholders hold hardly diversified portfolios and are therefore often very risk-averse and actively monitor management to prevent inefficient investments, resulting in lower acquisition activity. Results further indicate that family firms do not deviate from non-family firms in their acquisition behavior, which contradicts the socioemotional wealth theory. Overall, our main contribution is to provide evidence that the reintroduction of multiple-vote shares proposed by the European Commission in 2022 may lead to a decrease in M&A activity and thus hinder economic growth.