TY - JOUR
T1 - Market liquidity, investor participation, and managerial autonomy
T2 - Why do firms go private?
AU - Boot, Arnoud W.A.
AU - Gopalan, Radhakrishnan
AU - Thakor, Anjan V.
PY - 2008/8
Y1 - 2008/8
N2 - We focus on public-market investor participation to analyze the firm's decision to stay public or go private. The liquidity of public ownership is both a blessing and a curse: It lowers the cost of capital, but also introduces volatility in a firm's shareholder base, exposing management to uncertainty regarding shareholder intervention in management decisions, thereby affecting the manager's perceived decision-making autonomy and curtailing managerial inputs. We extract predictions about how investor participation affects stock price level and volatility and the public firm's incentives to go private, providing a link between investor participation and firm participation in public markets.
AB - We focus on public-market investor participation to analyze the firm's decision to stay public or go private. The liquidity of public ownership is both a blessing and a curse: It lowers the cost of capital, but also introduces volatility in a firm's shareholder base, exposing management to uncertainty regarding shareholder intervention in management decisions, thereby affecting the manager's perceived decision-making autonomy and curtailing managerial inputs. We extract predictions about how investor participation affects stock price level and volatility and the public firm's incentives to go private, providing a link between investor participation and firm participation in public markets.
UR - https://www.scopus.com/pages/publications/47749152179
U2 - 10.1111/j.1540-6261.2008.01380.x
DO - 10.1111/j.1540-6261.2008.01380.x
M3 - Article
AN - SCOPUS:47749152179
SN - 0022-1082
VL - 63
SP - 2013
EP - 2059
JO - The Journal of Finance
JF - The Journal of Finance
IS - 4
ER -