explained by the failure to consider the greater cost of
illiquidity in these periods.
82 A.W.Butler,G.Grullon,andJ.P.Weston,“StockMarket
LiquidityandtheCostof RaisingCapital,”workingpaper,
SSRN, 2002.
83 Firms that switched to restricted stock to compensate
management (asMicrosoftdid in 2004)arefacedwith the
illiquidity question much more directly. The employees
receiving this stock will incorporate theilliquidity of this
stock into its valuation.
84 H.DeAngelo, L. DeAngelo, and K. H.Wruck, “Asset
Liquidity, Debt Covenants and Managerial Discretion in
Financial Distress: The Collapse of L.A. Gear,” working
paper, SSRN, 2000.