"Blocks, Liquidity, and Corporate Control"
©
Journal of Finance,
February
1998
Volume: 53
|
Issue: 1
|
Pages: 1-25
Publication type: Journal article
Research Archive Topic: Capital Markets and Investments, Corporate Finance
Abstract
The paper develops a simple model of corporate ownership structure in which costs and benefits of ownership concentration are analyzed. The model compares the liquidity benefits obtained through dispersed corporate ownership with the benefits from efficient management control achieved by sonic degree of ownership concentration. The paper reexamines the free-rider problem in corporate control in the presence of liquidity trading, derives predictions for the trade and pricing of blocks, and provides criteria for the optimal choice of ownership structure.
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