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Reputation and the Wall Street Walk

Author

Listed:
  • Asano, Koji

Abstract

This study examines whether the threat of exit by blockholders can alleviate managers' moral hazard problems when they have reputation concerns in stock markets. When future cash flows decline over time, the threat of exit and reputation concerns both discipline managers. However, when future cash flows rise over time, blockholders trade based on information about the managers' commitment ability rather than their past performance, thereby weakening reputational discipline.

Suggested Citation

  • Asano, Koji, 2023. "Reputation and the Wall Street Walk," MPRA Paper 118158, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118158
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    References listed on IDEAS

    as
    1. Alex Edmans, 2009. "Blockholder Trading, Market Efficiency, and Managerial Myopia," Journal of Finance, American Finance Association, vol. 64(6), pages 2481-2513, December.
    2. Anat R. Admati & Paul Pfleiderer, 2009. "The "Wall Street Walk" and Shareholder Activism: Exit as a Form of Voice," The Review of Financial Studies, Society for Financial Studies, vol. 22(7), pages 2445-2485, July.
    3. Diamond, Douglas W, 1989. "Reputation Acquisition in Debt Markets," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 828-862, August.
    4. Dasgupta, Amil & Piacentino, Giorgia, 2015. "The Wall Street walk when blockholders compete for flows," LSE Research Online Documents on Economics 63144, London School of Economics and Political Science, LSE Library.
    5. Amil Dasgupta & Giorgia Piacentino, 2015. "The Wall Street Walk when Blockholders Compete for Flows," Journal of Finance, American Finance Association, vol. 70(6), pages 2853-2896, December.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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