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Ownership Structure, Speculation, and Shareholder Intervention
Author(s) -
Kahn Charles,
Winton Andrew
Publication year - 1998
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.45483
Subject(s) - speculation , intervention (counseling) , institution , shareholder , business , value (mathematics) , institutional investor , accounting , monetary economics , actuarial science , finance , economics , corporate governance , psychology , law , political science , machine learning , psychiatry , computer science
An institution holding shares in a firm can use information about the firm both for trading (“speculation”) and for deciding whether to intervene to improve firm performance. Intervention increases the value of the institution's existing shareholdings, but intervention only increases the institution's trading profits if it enhances the precision of the institution's information relative to that of uninformed traders. Thus, the ability to speculate can increase or decrease institutional intervention. We examine key factors that affect the intervention decision, the usefulness of “short‐swing” provisions and restricted shares in encouraging institutional intervention, and implications for ownership structure across different firms.