Large shareholders, monitoring, and ownership dynamics: Toward pure managerial firms? - Aix-Marseille Université Access content directly
Journal Articles Journal of Economic Dynamics and Control Year : 2013

Large shareholders, monitoring, and ownership dynamics: Toward pure managerial firms?

Amal Hili
  • Function : Author
Ngo van Long
  • Function : Author

Abstract

We study ownership dynamics when the manager and the large shareholder, both risk neutral, simultaneously choose effort and monitoring level respectively to serve their non-congruent interests.We show that there is a wedge between the valuation of shares by atomistic shareholders and the large shareholder's valuation. At the Markov-perfect equilibrium, the large shareholder divests her shares. If the incongruence of their interests is mild, divestment is drastic: all her shares are sold immediately. If their interests diverge sharply, the divestment is gradual in order to prevent a sharp fall in share price. In the limit the firm becomes purely managerial.
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Dates and versions

hal-01499625 , version 1 (31-03-2017)

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Amal Hili, Didier Laussel, Ngo van Long. Large shareholders, monitoring, and ownership dynamics: Toward pure managerial firms?. Journal of Economic Dynamics and Control, 2013, 37 (3), pp.666-679. ⟨10.1016/j.jedc.2012.10.006⟩. ⟨hal-01499625⟩
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