Liquidity and Shareholder Activism

@article{Norli2014LiquidityAS,
  title={Liquidity and Shareholder Activism},
  author={Oyvind Norli and C. Ostergaard and I. Schindele},
  journal={Review of Financial Studies},
  year={2014},
  volume={28},
  pages={486-520}
}
Blockholders' incentives to intervene in corporate governance are weakened by free-rider problems and high costs of activism. Theory suggests activists may recoup expenses through informed trading of target firms' stock when stocks are liquid. We show that stock liquidity increases the probability of activism but does less so for potentially overvalued firms for which privately informed blockholders may have greater incentives to sell their stake than to intervene. We also document that… Expand
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