Liquidity and control: A dynamic theory of corporate ownership structure

Bolton, Patrick ; Thadden, Ernst-Ludwig von

Document Type: Working paper
Year of publication: 1997
The title of a journal, publication series: Cahiers de Recherches Économiques
Volume: 97-12
Place of publication: Lausanne
Publishing house: Département d'Econométrie et d'Economie Politique, Université de Lausanne ; HEC
Publication language: English
Institution: School of Law and Economics > Microeconomics and Finance (von Thadden (2004-)
Subject: 330 Economics
Abstract: The paper develops a theory of ownership structure based on the notion that corporate control and secondary market liquidity are not perfectly compatible with each other. We analyse the tradeoff between these two objectives for two different ownership structures: the privately held firm, which is characterised by restricted trading opportunities for owners and non-anonymous trading, and the publicly traded firm where trading opportunities are unrestricted and trading is anonymous. We develop pricing formulas for each structure, compare these with each other, and derive predictions for optimal ownership design, depending on the institutional structure of the capital market.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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