Is greater trading liquidity good or bad for corporate governance? We address this question both theoretically and empirically. We solve a model consisting of an optimal IPO followed by a dynamic Kyle market in which the large investor's private information concerns her own plans for taking an...

Using a dataset of the firms listed on the Neuer Markt in Germany, this Paper demonstrates that venture backed firms differ from firms with other financial resources, especially debt. Thus, the results of this study provide evidence for the hypothesis that small and innovative firms are more...

We study the implications of ownership and its induced incentives on firm performance in the ‘New Economy’. Instead of traditional performance we use firm survival on the stock market as the performance indicator. Using a unique data set of all 341 firms listed on the Neuer Markt, the German...

We argue in favour of the shareholder model of the firm for three main reasons, First, serving multiple stakeholders leads to ill-defined property rights. What sounds like a fair compromise between stakeholders can easily evolve in a permanent struggle between the stakeholders about the ultimate...

When stakeholder protection is left to the voluntary initiative of managers, relations with social activists may become an effective entrenchment strategy for inefficient CEOs. We thus argue that managerial turnover and firm value are increased by the institutionalization of stakeholder...

In this Paper we discuss the role of the media in pressuring corporate managers and directors to behave in ways that are 'socially acceptable'. Sometimes this coincides with shareholders’ value maximization, others not. We provide both anecdotal and systematic evidence that media affect...

This Paper investigates the impact of ownership patterns on the way the firm is monitored, on the liquidity of its shares, and on its stock price. Building on the literature showing that local mutual funds (funds holding geographically close firms) enjoy superior returns due to private...

We propose a model in which better governance incentivizes managers to perform better and thus saves on the cost of providing pay for performance. However, when managerial talent is scarce, firms' competition to attract better managers reduces an individual firm's incentives to invest in...