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- Title
Negotiated Block Trades and Corporate Control.
- Authors
Barclay, Michael J.; Holderness, Clifford G.
- Abstract
We identify negotiated trades of large-percentage blocks of stock as corporate control transactions. When a block trades and the firm is not fully acquired, cumulative abnormal returns average 5.6%, and 33% of the chief executives are replaced within a year. Stock-price increases are larger when control passes to the new blockholder, when management does not resist the blockholder's effort to influence corporate policy, and when the block purchaser eventually fully acquires the firm. These findings suggest that the specific skills and expertise of blockholders, and not just the concentration of ownership, are important determinants of firm value.
- Subjects
BLOCK trading; STOCK prices; CORPORATE raiders; CORPORATE finance; MERGERS &; acquisitions; INDUSTRIAL policy; BUSINESS negotiation; CHIEF executive officers; INSTITUTIONAL investments; ANTITAKEOVER strategies
- Publication
Journal of Finance (Wiley-Blackwell), 1991, Vol 46, Issue 3, p861
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1991.tb03769.x