NEGOTIATED BLOCK TRADE AND REBUILDING OF TRUST

• 成果类型: Article
• 署名作者: Au, Pak Hung; Fong, Yuk-Fai; Li, Jin
• 署名单位: Hong Kong University of Science & Technology; University of Hong Kong
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12444
• 发表日期: 2020
• 页码: 901-939
• 关键词: large shareholders; firm performance; private benefits; corporate-ownership; executive turnover; stock ownership; MARKET; top; acquisitions; LITIGATION

摘要

We investigate the impact of corporate governance on customers' trust using a dynamic model of experience-goods firm. In the optimal equilibrium, customers' trust in the firm is linked to its behavior in the market for corporate control, so that the controlling shareholder has incentives to ensure high product quality while noncontrolling shareholders' interests are protected. Following a trust-damaging event, turnover of the controlling share block restores customers' trust and enhances total shareholder value. Our analysis identifies an endogenous cost of corporate control, offers implications for the control premium, and provides a novel rationale for the separation of ownership and control.