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Large Shareholders and Corporate Control

Andrei Shleifer, Robert W. Vishny

Journal of Political Economy · 1986 · 8,652 citationsOpen access

doi.org/10.1086/261385Free full text

Abstract

In a corporation with many small owners, it may not pay any one of them to monitor the performance of the management. We explore a model in which the presence of a large minority shareholder provides a partial solution to this free-rider problem. The model sheds light on the following questions: Under what circumstances will we observe a tender offer as opposed to a proxy fight or an internal management shake-up? How strong are the forces pushing toward increasing concentration of ownership of a diffusely held firm? Why do corporate and personal investors commonly hold stock in the same firm, despite their disparate tax preferences?

Cite this paper

Shleifer, A., & Vishny, R. W. (1986). Large shareholders and corporate control. Journal of Political Economy, 94(3, Part 1), 461–488. https://doi.org/10.1086/261385

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