A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.
- Topic classification is ongoing.
- Please kindly let me know [mingze.gao@mq.edu.au] in case of any errors.
Your search
Publication year
Voting and Trading the Shareholder's Dilemma
Resource type
Authors/contributors
- Meirowitz, Adam (Author)
- Pi, Shaoting (Author)
Title
Voting and Trading the Shareholder's Dilemma
Abstract
We study governance when shareholders vote and can also buy or sell shares. We find that voting for the policy that one believes is better for the firm maximizes portfolio value only when pivotal; otherwise, it is better to vote against one’s information, distort the market, and then trade at the distorted price. Equilibrium voting informativeness balances these forces and is demonstrably low. As the number of shareholders grows, the probability of making the correct decision becomes lower than the informational quality of just one shareholder’s private signal. Despite this, shareholders extract information rents from trading and thus obtain additional value from their private information. These effects are related to the level of direct information leakage in the market. The predicted patterns of trading and market volatility help reconcile several debates.
Publication
Journal of Financial Economics
Volume
146
Issue
3
Pages
1073-1096
Date
2022-12-01
Journal Abbr
Journal of Financial Economics
Language
en
ISSN
0304-405X
Short Title
Voting and trading
Accessed
12/29/22, 2:47 PM
Library Catalog
ScienceDirect
Citation
Meirowitz, A., & Pi, S. (2022). Voting and Trading the Shareholder’s Dilemma. Journal of Financial Economics, 146, 1073–1096.
Journals
Link to this record
Relations