Corporate Governance and Corporate Control: Evidence from Trading

In Chapter 1, I document a negative (positive) relationship between changes in large (small) blockholders ’ ownership and abnormal returns. The evidence in this paper suggests that an increase in the relatively large blockholders ’ ownership raises the consumption of private benefits while an increase in the relatively small blockholders ’ ownership constrains large blockholders from expropriating minor-ity shareholders. Moreover, I find an inversely U-shaped relationship between changes in the largest blockholders ’ ownership and firm value. As large block-holders ’ ownership and control increase, the negative effect of firm value driven by expropriating minority shareholders starts to exceed the incentive benefits of monitoring by the largest blockholder. I also show that the negative relationship between changes in institutional investors ’ control and abnormal returns declines as analysts ’ following increases. In Chapter 2, I study the role of trading as a governance mechanism. I hy-pothesize that governance through trading plays a significant monitoring role i