Blockholder Ownership and Corporate Control: The Role of Liquidity

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


Employing an instrumental variable approach based on the regulatory change of tick sizes, I examine the link between the liquidity of a firm's equity and activism by large shareholders. I find that liquidity increases the likelihood of block formation. Blockholders of more liquid securities take smaller stakes that do not precommit them to monitor. I find evidence that the threat of exit from a block can discipline managers and that this threat is more effective when liquidity is higher. While liquidity increases exit from existing blocks, I find no evidence that share illiquidity that forces blockholders to actively monitor.

Original languageEnglish
Article number1450003
JournalQuarterly Journal of Finance
Issue number1
StatePublished - Mar 1 2014

Bibliographical note

Publisher Copyright:
© 2014 World Scientific Publishing Company and Midwest Finance Association.


  • Activism
  • Blockholder
  • Corporate governance
  • Liquidity

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Strategy and Management


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