Governance Through Exit and Voice: A Theory of Multiple Blockholders
Most firms have multiple blockholders. This dilution of ownership generates free-rider problems and is therefore difficult to explain with traditional theories. In such models, blockholders add value through direct intervention (voice) and a concentrated stake is optimal to encourage them to incur the associated costs. This paper rationalizes the presence of multiple blockholders by showing that the same co-ordination difficulties that hinder voice improve their effectiveness in adding value through a second channel: disciplining the manager through exit. Since multiple blockholders cannot co-ordinate to limit their trades and maximize combined trading profits, competition among them impounds more information into prices. This makes the threat of disciplinary exit more credible, thus inducing higher managerial effort. The models comparative statics derive empirical predictions on the factors affecting optimal blockholder structure.
Multiple blockholders corporate governance market efficiency exit voice insider trading free-rider problem Wall Street Rule voting with your feet
Alex Edmans Gustavo Manso
University of Pennsylvania The Wharton School Massachusetts Institute of Technology Sloan School of Management
国际会议
大连
英文
1-29
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）