Public Trading and Private Incentives:
Review of Financial Studies
2004
This article studies the link between public trading and the activity of a firm's large shareholder who can affect firm value. Public trading results in the formation of a stock price that is informative about the large shareholder's activity. This increases the latter's incentives to engage in value-increasing activities. Indeed, if he has to liquidate part of his stake before the effect of his activity is publicly observed, a more informative price rewards him for his activity. Implications are derived for the decision to go public, capital structure, and security design.
- DOI
- 10.1093/rfs/hhh002
- Volume
- 17 (4)
- Pages
- 985-1014
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref