The "Wall Street Walk" and Shareholder Activism: Exit as a Form of Voice
AbstractWe examine whether a large shareholder can alleviate conflicts of interest between managers and shareholders through the credible threat of exit on the basis of private information. In our model, the threat of exit often reduces agency costs, but additional private information need not enhance the effectiveness of the mechanism. Moreover, the threat of exit can produce quite different effects depending on whether the agency problem involves desirable or undesirable actions from shareholders' perspective. Our results are consistent with empirical findings on the interaction between managers and minority large shareholders and have further empirical implications. The Author 2009. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: email@example.com, Oxford University Press.
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Bibliographic InfoArticle provided by Society for Financial Studies in its journal The Review of Financial Studies.
Volume (Year): 22 (2009)
Issue (Month): 7 (July)
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Other versions of this item:
- Admati, Anat R. & Pfleiderer, Paul C., 2007. "The "Wall Street Walk" and Shareholder Activism: Exit as a Form of Voice," Research Papers 1918r2, Stanford University, Graduate School of Business.
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