Trading
Working Paper
Trading and Shareholder Democracy
We study shareholder voting in a model in which trading affects the composition of the shareholder base. Trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance and multiple equilibria....Read more
When Shareholders Disagree: Trading After Shareholder Meetings
This paper analyzes how trading after shareholder meetings changes the composition of the shareholder base. Analyzing daily trades, we find that mutual funds reduce their holdings if their votes are opposed to the voting outcome. Trading volume...Read more
Weak Governance by Informed Active Shareholders
Do informed shareholders who can influence corporate decisions improve governance? We demonstrate this may not be generally true in a model of takeovers. The model suggests that a shareholder’s ability to collect information and trade ex post may...Read more
Competition Theory of Risk Management Failures
We study a model in which firms compete preemptively for trading opportunities and risk management introduces latency in trading. As the time pressure faced by firms is endogenous to risk management choices, strategic complementarities can...Read more
Governance Under Common Ownership
Conventional wisdom is that diversification weakens governance by spreading an investor too thinly. We show that, when an investor owns multiple firms ("common ownership"), governance through both voice and exit can strengthen -- even if the...Read more
Lehman Brothers: Did Markets Know?
On September 15, 2008, Lehman Brothers Inc. announced their filing for bankruptcy. This announcement did take markets by surprise causing widespread panic and disruptions in financial systems worldwide. It has been widely argued that financial...Read more
Trading Rules, Competition for Order Flow and Market Fragmentation
We investigate competition between traditional stock exchanges and new ?dark? trading
venues using an important difference in regulatory treatment. SEC required minimum pricing increments constrain some stock spreads, causing large limit...Read more
Conflict of Interest, Secrecy and Insider Information of Directors - A Comparative Analysis
The duty of loyalty is highly developed in Anglo-American countries, while in continental European countries it has only received more hesitant attention. Yet more recently there are tendencies to more convergence. They stem from company law...Read more
Bonus Schemes and Trading Activity
Little is known about how different bonus schemes affect traders' propensity to trade and which bonus schemes improve traders' performance. We study the effects of linear versus threshold (convex) bonus schemes on traders' behavior...Read more
Board Structure and Price Informativeness
We develop and test the hypothesis that private information incorporated into stock prices (price informativeness) affects the structure of corporate boards. We find a negative relation between measures of price informativeness and measures of...Read more