Blockholder exit threats and corporate cash holdings

Lingna Sun, Hieu V. Phan and Thuy Simpson

The Financial Review, 2021, vol. 56, issue 4, 821-843

Abstract: We investigate the effects of blockholder exit threats, which increase with stock liquidity, on corporate cash holdings and the value of cash to shareholders. Exploiting decimalization as an exogenous shock to stock liquidity to identify the effects of blockholder exit threats, we find robust evidence that blockholder exit threats have a negative effect on corporate cash holdings and a positive effect on the value of cash to shareholders. Further analysis indicates that exit threat induces firms to increase stock repurchases and improve investment efficiency. Our evidence is consistent with the view that blockholder exit threats are an effective corporate governance mechanism.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.1111/fire.12278

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:56:y:2021:i:4:p:821-843

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0732-8516

Access Statistics for this article

The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan

More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().