Using U.S. banking data between 1993 and 2014, this paper investigates the relationship between CEO optimism and bank liquidity creation. It finds that banks with optimistic CEOs create more liquidity over the entire sample period. In addition, the positive effect of CEO optimism on liquidity creation became stronger during the subprime crisis of 2007‒2009, and this stronger effect was mainly driven by banks with high capital ratios and large banks. These results imply that CEO optimism is likely to encourage banks to create liquidity, especially during banking crises. The results presented in this paper hold when subjected to various robustness checks.

Using a large sample of block acquisitions, this paper examines the governance role of customers that acquire block ownership in supplier shares. We find that compared to targets acquired by noncustomers, those acquired by customers experience higher abnormal announcement returns, larger increases in post-acquisition long-term operating performance, and higher non-routine turnover of poorly performing CEOs. These results are evident when target managerial agency problems are highly detrimental to the supplier–customer relationship. The results support the view that customers’ nonfinancial claims in targets provide customers strong incentives to monitor target managers above and beyond previously documented monitoring by large shareholders.