Blockholder Ownership and Market Liquidity
Posted: 27 Dec 2000
This paper examines the association between block ownership and market liquidity. Blockholders are believed to have access to private, value relevant information via their role as monitors of firms' operations. Consistent with this, we find that firms with greater blockholder ownership, either by managers or external entities, have larger quoted spreads, effective spreads, and adverse selection spread components, and smaller quoted depths.
JEL Classification: G32, G34, G12, M41
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