Blockholder Ownership and MarketLiquidity

Abstract

This paper examines the association between blockownership and market liquidity. Blockholders arebelieved to have access to private, value-relevantinformation via their roles as monitors of firms'operations. consistent with this, we find that firmswith greater blockholder ownership, either bymanagers or external entities, have larger quotedspreads, effective spreads, adverse selection spreadcomponents, and smaller quoted depths.