Working Paper 05/2009 available

Are blocks of shares traded because the buyer is a more efficient monitor with high security benefits, or because the buyer has high private benefits from the control rights that come with the shares?

Using voting rights as the vehicle for private benefits, the author finds that the selling shareholders in block transactions attach more value to private benefits than the buyers. In tender offer transactions, the answer is that private benefits are insignificant to both sides of the transaction. As an alternative measure of the transaction premium, the abnormal return premium is calculated. This represents the stock market's valuation of the transaction. The stock market puts a positive premium on the sample transactions.

Thomas Poulsen's main area of research is corporate governance, with an interest in corporate finance topics. A unifying theme of his recent research is that it applies game theory to ownership data to map out the relative power of shareholders embedded in the structure of share ownership in public firms. He would like to extent this research to include the power (horizontal as well as vertical) of other organizational members; especially that of employees. In addition, he is also interested in studying in more detail the sources and dynamics of private benefits. Currently, he is writing about merger waves, limits of private equity, seal-dealing, and employee ownership. He is teaching at graduate level and supervising thesis’ at both undergraduate and graduate level.