Crushed by a Rational Stampede: Strategic Share Dumping and Shareholder Insurrections

Posted: 19 Jan 2006 Last revised: 18 Jan 2018

See all articles by Mukarram Attari

Mukarram Attari

CRA International, Incorporated

Thomas H. Noe

University of Oxford - Said Business School; University of Oxford - Balliol College; Bank of Finland; European Corporate Governance Institute

Suman Banerjee

Stevens Institute of Technology; Stevens Institute of Technology

Multiple version iconThere are 2 versions of this paper

Date Written: 2006

Abstract

In this paper, we develop a dynamic model of institutional share dumping surrounding control events. Institutional investors sometimes dump shares, despite trading losses, in order to manipulate share prices and trigger activism by "relationship" investors. These institutional investors are motivated to trade not only by trading profits but also by a desire to protect the value of their inventory and to disguise the quality of their own information. Relationship investor profit from targeting firms both by improving firm performance and by generating private information.

Keywords: Strategic trading, Ownership structure, Corporate governance

JEL Classification: G23, G32, G34

Suggested Citation

Attari, Mukarram and Noe, Thomas H. and Banerjee, Suman, Crushed by a Rational Stampede: Strategic Share Dumping and Shareholder Insurrections (2006). Journal of Financial Economics, Vol. 79, No. 1, January 2006; Stevens Institute of Technology School of Business Research Paper. Available at SSRN: https://ssrn.com/abstract=875507

Mukarram Attari

CRA International, Incorporated ( email )

1201 F. St. NW
Ste. 700
Washington, DC 20004
United States
617-425-3336 (Phone)

Thomas H. Noe

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 3BJ
United Kingdom

University of Oxford - Balliol College ( email )

Broad St
Oxford, OX1 3BJ
United Kingdom

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

European Corporate Governance Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Suman Banerjee (Contact Author)

Stevens Institute of Technology ( email )

525 River Street
Hoboken, NJ 07030
United States
2012613689 (Phone)

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
636
PlumX Metrics