Crushed by a rational stampede: Strategic share dumping and shareholder insurrections

Mukarram Attari; Suman Banerjee; Thomas H. Noe

doi:10.1016/j.jfineco.2004.09.003

Crushed by a rational stampede: Strategic share dumping and shareholder insurrections

Mukarram Attari
, Suman Banerjee
, Thomas H. Noe

Charles River Associates
Tulane University

Research output: Contribution to journal › Article › peer-review

12 Scopus citations

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.

Original language	English
Pages (from-to)	181-222
Number of pages	42
Journal	Journal of Financial Economics
Volume	79
Issue number	1
DOIs	https://doi.org/10.1016/j.jfineco.2004.09.003
State	Published - Jan 2006

Keywords

Corporate governance
Ownership structure
Strategic trading

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10.1016/j.jfineco.2004.09.003

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KW - Ownership structure

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Crushed by a rational stampede: Strategic share dumping and shareholder insurrections

Abstract

Keywords

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