The Trade-Off Between Liquidity and Control Revisited

A.S. Mello and Rafael Repullo

Working Papers from Centro de Estudios Monetarios Y Financieros-

Abstract: This paper reexamines the analysis in Maug (1998) on the relationship between market liquidity and large shareholder activism. Taking explicitly into account the effect of a majority requirement for intervention in the management of a firm, we show that, contrary to Maug's claim, there is a range of parameter values for which increases in market liquidity decrease the probability of intervention.

Keywords: SHAREHOLDERS; BUSINESS ORGANIZATION; OWNERSHIP (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Pages: 12 pages
Date: 1999
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Working Paper: The Trade-Off Between Liquidity and Control Revisited (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:cemfdt:9912

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