Separating Ownership and Information
- (pp. 3039-62)
Abstract
This paper identifies an upside of the separation of ownership and control, typically the source of inefficiencies in the theory of the firm. Because insiders obtain private information by exercising control, the separation of ownership and control leads to a separation of ownership and information. We show that this separation is necessary for efficient trade in the market for corporate control. The analysis reveals how strategic communication between inside and outside shareholders facilitates takeovers by eliciting external bidders' private information. Our results call into question mandatory disclosure requirements during takeovers.Citation
Voss, Paul, and Marius Kulms. 2022. "Separating Ownership and Information." American Economic Review, 112 (9): 3039-62. DOI: 10.1257/aer.20211069Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance