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The Wall Street walk when blockholders compete for flows

Dasgupta, Amil and Piacentino, Giorgia (2015) The Wall Street walk when blockholders compete for flows. Journal of Finance, 70 (6). pp. 2853-2896. ISSN 0022-1082

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Identification Number: 10.1111/jofi.12308

Abstract

Effective monitoring by equity blockholders is important for good corporate governance. A prominent theoretical literature argues that the threat of block sale (“exit”) can be an effective governance mechanism. Many blockholders are money managers. We show that when money managers compete for investor capital, the threat of exit loses credibility, weakening its governance role. Money managers with more skin in the game will govern more successfully using exit. Allowing funds to engage in activist measures (“voice”) does not alter our qualitative results. Our results link widely prevalent incentives in the ever-expanding money management industry to the nature of corporate governance.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2015 The American Finance Association
Divisions: Finance
Subjects: H Social Sciences > HG Finance
Sets: Departments > Finance
Date Deposited: 13 Aug 2015 11:25
Last Modified: 20 Sep 2019 02:01
Funders: Paul Woolley Centre, LSE
URI: http://eprints.lse.ac.uk/id/eprint/63144

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