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

Abstract:

In this paper, we develop a dynamic model of institutional share dumping surrounding control events. Uninformed institutional investors dump shares, despite trading losses, in order to manipulate share prices and trigger activism by activist "relationship" investors. Nonactivist institutional investors, who have private information regarding both firm value and the quality of their own information, are motivated to trade not only by trading profits but also by a desire to protect the value of...

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Thomas Noe More by this author
Mukerram Attari More by this author
Suman Banerjee More by this author
Publication date:
2006
URN:
uuid:26b16277-bf9d-49d6-af34-60a20f0e5d63
Local pid:
oai:eureka.sbs.ox.ac.uk:1111

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