We analyze the determinants of buyout funds' investment decisions. We argue that when the supply of capital is lsquo;sticky' in the short run, the timing of funds' investment decisions, their risk-taking behavior, and their subsequent returns depend on changes in the demand for private equity,...

We solve a dynamic Kyle model in which the large investor's private information concerns her plans for taking an active role in governance. We show that once a block has been created, its continued existence is jeopardized by an increase in the liquidity of the firm's stock. Greater liquidity...