Liquidity

Market Liquidity, Investor Participation and Managerial Autonomy: Why do Firms go Private?

Illiquid Owners and Firm Behavior: Financial and Real Effects of the Personal Wealth Tax on Private Firms

We examine how negative liquidity shocks to households propagate to the firms they own. Our main tool for identification is a tax-driven shock to the...

The Value of Control and the Costs of Illiquidity

We develop a search model of block trades that values the illiquidity of controlling stakes. The model considers several dimensions of illiquidity....

The Effect of Liquidity on Governance

This paper studies the effect of stock liquidity on blockholder governance. Conditional upon acquiring a stake, liquidity reduces the likelihood that...

Activism, Strategic Trading, and Liquidity

We analyze dynamic trading by an activist investor who can expend costly effort to affect firm value. We obtain the equilibrium in closed form for a...

Mandatory IFRS Reporting and Changes in Enforcement

In recent years, reporting under International Financial Reporting Standards (IFRS) became mandatory in many countries. The capital-market effects...

The Value of Financial Intermediation: Evidence from Online Debt Crowdfunding

Whereas many online marketplaces are fundamentally peer-to-peer, credit ones sell diversified loan portfolios characterized by maturity mismatch,...

The Dark Side of Liquidity Creation: Leverage and Systemic Risk

We consider a model in which the threat of bank liquidations by creditors as well as equity-based compensation incentives both discipline bankers, but...

The Future in Law and Finance

The success of a capitalist economy rests upon the ability of finance to sustain potentially infinite growth, based on funding today the output of...

Why High Leverage is Optimal for Banks

Liquidity production is a central role of banks. When there is a market premium for the production of (socially valuable) liquid financial claims and no...

The New Mechanisms of Market Inefficiency

Mechanisms of market inefficiency are some of the most important and least understood institutions in financial markets today. A growing body of...

Dispersed Ownership: The Theories, the Evidence, and the Enduring Tension Between 'Lumpers' and 'Splitters'

From a global perspective, the single most noticeable fact about corporate governance is the radical dichotomy between dispersed ownership and...