Negotiated Block Trades and Corporate Control

  • Author(s): MICHAEL J. BARCLAY, CLIFFORD G. HOLDERNESS
  • Published: Apr 30, 2012
  • Pages: 861-878
  • DOI: 10.1111/j.1540-6261.1991.tb03769.x

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.

Jump to menu

Main Navigation

Search the Site / Journal

Search Keywords

Search Tips

Members' Login

Credentials

Members' Options

Site Footer

View Mobile Version