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?
Статья используется в учебной программе Seminar in Corporate
Finance, Howe J.S.