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Article: Negotiated Block Trade and Rebuilding of Trust

TitleNegotiated Block Trade and Rebuilding of Trust
Authors
Au, PHFong, Y-FLi, J
KeywordsCorporate governance
Boards
Corporate boards
Issue Date2020
PublisherWiley-Blackwell Publishing, Inc. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0020-6598
Citation
International Economic Review, 2020, v. 61 n. 2, p. 901-939 How to Cite?
DOI: http://dx.doi.org/10.1111/iere.12444
AbstractWe investigate the impact of corporate governance on customers' trust using a dynamic model of experience‐goods firm. In the optimal equilibrium, customers' trust in the firm is linked to its behavior in the market for corporate control, so that the controlling shareholder has incentives to ensure high product quality while noncontrolling shareholders' interests are protected. Following a trust‐damaging event, turnover of the controlling share block restores customers' trust and enhances total shareholder value. Our analysis identifies an endogenous cost of corporate control, offers implications for the control premium, and provides a novel rationale for the separation of ownership and control.
Persistent Identifierhttp://hdl.handle.net/10722/282487
ISSN
0020-6598
2023 Impact Factor: 1.5
2023 SCImago Journal Rankings: 2.350
ISI Accession Number ID
WOS:000529268000001

 

DC FieldValueLanguage
dc.contributor.authorAu, PH-
dc.contributor.authorFong, Y-F-
dc.contributor.authorLi, J-
dc.date.accessioned2020-05-15T05:28:45Z-
dc.date.available2020-05-15T05:28:45Z-
dc.date.issued2020-
dc.identifier.citationInternational Economic Review, 2020, v. 61 n. 2, p. 901-939-
dc.identifier.issn0020-6598-
dc.identifier.urihttp://hdl.handle.net/10722/282487-
dc.description.abstractWe investigate the impact of corporate governance on customers' trust using a dynamic model of experience‐goods firm. In the optimal equilibrium, customers' trust in the firm is linked to its behavior in the market for corporate control, so that the controlling shareholder has incentives to ensure high product quality while noncontrolling shareholders' interests are protected. Following a trust‐damaging event, turnover of the controlling share block restores customers' trust and enhances total shareholder value. Our analysis identifies an endogenous cost of corporate control, offers implications for the control premium, and provides a novel rationale for the separation of ownership and control.-
dc.languageeng-
dc.publisherWiley-Blackwell Publishing, Inc. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0020-6598-
dc.relation.ispartofInternational Economic Review-
dc.rightsThis is the peer reviewed version of the following article: International Economic Review, 2020, v. 61 n. 2, p. 901-939, which has been published in final form at https://doi.org/10.1111/iere.12444. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.-
dc.subjectCorporate governance-
dc.subjectBoards-
dc.subjectCorporate boards-
dc.titleNegotiated Block Trade and Rebuilding of Trust-
dc.typeArticle-
dc.identifier.emailFong, Y-F: yukfaims@hku.hk-
dc.identifier.emailLi, J: jli1@hku.hk-
dc.identifier.authorityFong, Y-F=rp02535-
dc.identifier.authorityLi, J=rp02406-
dc.description.naturepostprint-
dc.identifier.doi10.1111/iere.12444-
dc.identifier.scopuseid_2-s2.0-85083958930-
dc.identifier.hkuros309932-
dc.identifier.volume61-
dc.identifier.issue2-
dc.identifier.spage901-
dc.identifier.epage939-
dc.identifier.isiWOS:000529268000001-
dc.publisher.placeUnited States-
dc.identifier.issnl0020-6598-

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