Departmental Seminar

Speaker:

Dr. Sivan Frenkel

Recanati Business School

Tel-Aviv University

 

Title:

Dynamic Asset Sales with Information Externalities

 

Abstract:

I analyze a dynamic model of asset sales over the counter in which a manager has stock-related compensation and a transaction conveys information about the firm's value. I examine how this information externality affects the timing and the price of the sale, as well as the pattern of stock prices before and after the sale. The implications of bargaining power, inventories, gains from trade and the introduction of a vesting period are discussed. The model can shed new light on observed properties of corporate sell-offs, as well as explain market dry-ups during downturn periods.