An investor must file a 13D form upon accumulation of 5 percent of the stock of a publicly traded company. Typically the stock market reacts quite favorably to these announcements. But outside block ownership has both costs and benefits.
1. Provide a brief description of these costs and benefits.
2. Does the evidence on the stock market reactions to 13D filings suggest that the benefits of outside block ownership are typically larger than the costs? Explain.