The Wall Street walk when blockholders compete for flows

Dasgupta, Amil ORCID: 0000-0001-8474-9470 and Piacentino, Giorgia (2011) The Wall Street walk when blockholders compete for flows. Financial Markets Group Discussion Papers (692). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

An important recent theoretical literature argues that the threat of exit can represent an effective form of governance when the blockholder is a principal. However, a significant fraction of equity blocks is held by delegated portfolio managers. How do agency frictions arising from the delegation of portfolio management affect the ability of blockholders to govern via the threat of exit? We show that when blockholders are sufficiently career concerned exit will fail as a disciplining device. Our results have testable implications on the relative degree to which different classes of delegated portfolio managers use exit as a form of governance.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 2011 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G0 - General > G00 - General
Date Deposited:	29 Jun 2023 09:00
Last Modified:	01 Oct 2024 03:20
URI:	http://eprints.lse.ac.uk/id/eprint/119060

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