BETRIEBSWIRTSCHAFTLICHES FORSCHUNGS-SEMINAR:

Am Fr., 23.1.1998 von 15.30-17.00 haelt im HS 8 des Betriebswirtschaftlichen Zentrums, Universitaet Wien, Bruennerstrasze 72, 1210 Wien,

Prof. Ernst-Ludwig von Thadden (Universite de Lausanne and CEPR)

einen Vortrag ueber seine gemeinsame Arbeit mit Enrico C. Perotti (University of Amsterdam and CEPR),

''The Strategic Effect of Dominant Investors on Transparency and Competition''.

Eine Kopiervorlage der Papers liegt - soweit vorhanden - im Sekretariat von Prof. Zechner am Betriebswirtschaftszentrum auf.

------------ Abstract:

This paper studies product market competition if firms are influenced by different dominant investors. Dominant investors can influence corporate transparency by affecting market liquidity or the cost of information collection. More transparency on a firm's competitive position has both strategic advantages and disadvantages. Most importantly in our context, transparency results in higher variability of profits and output. Lenders prefer less information revelation through stock market trading, since this protects firms when in a weak competitive position, while equityholders prefer more to make full use of the strategic advantage of a strong firm. Thus bank-controlled firms will tend to discourage trading to reduce price informativeness, while shareholder-run firms prefer more transparency. Our comparative statics show that bank control can fail to keep firms less transparent as global trading volumes rise.