The greater the managerial stock ownership in closed-end funds, the larger are the
discounts to net asset value. The average discount for funds with blockholders is
14%, whereas the average discount for funds without blockholders is only 4%. This
relation is robust over time and to various model specifications that control for
other factors that affect discounts. We argue that blockholders receive private benefits
that do not accrue to other shareholders and that they veto open-ending proposals
to preserve these benefits. We support this argument by documenting a range of potential
private benefits received by blockholders in closed-end funds.