Emanuel Zur

The Effect of Liquidity on Governance

This paper demonstrates a positive effect of stock liquidity on blockholder governance. Liquidity increases the likelihood of block formation. Conditional upon acquiring a stake, liquidity reduces the likelihood that the blockholder governs through voice (intervention)--as shown by the lower propensity for active investment (filing Schedule 13D) than passive investment (filing Schedule 13G). The lower frequency of activism does not reflect the abandonment of governance, but governance through the alternative channel of exit (selling ones shares): A 13G filing leads to positive announcement returns and improvements in operating performance, especially in liquid firms. Moreover, taking into account the increase in block formation, liquidity has an unconditional positive effect on voice as well as exit. We use decimalization as an exogenous shock to liquidity to identify causal effects. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Dodging Repatriation Tax: Evidence from the Domestic Mergers and Acquisitions Market

U.S. multinational corporations (MNCs) pay taxes upon repatriation of foreign earnings. This paper investigates whether MNCs facing higher repatriation tax costs are more likely to engage in tax avoidance strategies involving domestic acquisitions. We find that MNCs with higher levels of repatriation tax costs are more likely to engage in both domestic and foreign acquisitions. Furthermore, the positive association between repatriation tax costs and the likelihood of domestic acquisitions is driven by stock-financed acquisitions, and strong corporate governance strengthens this positive relationship. Our findings suggest that domestic acquisitions are a prevalent way for MNCs to access cash trapped overseas.

A Leopard Does Not Change His Spots – Evidence of Activism Persistence in the Hedge Fund Industry

This paper investigates hedge fund performance persistence through examination of actual fund behavior rather than self-reported returns. We propose new activism indexes. We show that past activism is positively correlated with fund orientation toward confrontational activist behavior with respect to future purchases. We show that hedge fund activism is positively correlated the size of required minimum investment and manager graduation from a top MBA program.