High liquidate and low liquidate stocks were selected based on the returns for the past week.
In their study, a similar strategy to that of Lo and MacKinlay was employed where stocks were ranked using past one-week returns, and the contrarian portfolio was held for the follow high liquidate week.
Unfortunately, the low liquidate minus High liquidate portfolio (formed based on the past 1-week return) yielded significant returns for only the holding period of 1 week.
Maug and Kahn and High liquidate suggest that greater liquidity can be an opportunity for large shareholders to increase their profit by monitoring the firm's management.
As suggested by Maug and Kahn and High liquidate if a firm's shareholders commit to monitoring management, they trade frequently to maximize their profits from their private information and thus contribute to improve the stock's liquidity.
AB then liquidates, by distributing proportionately its CD and EF interests to A and B.
Variation 2--An alternative view is that the underlying transaction in Example 25 (i.e., AB contributes all of its assets and liabilities to CD and EF in exchange for interests therein, then liquidates) also resembles a merger.
Contrary to the form undertaken, for tax purposes AB is deemed to have contributed its assets and liabilities to BC in exchange for BC interests; AB is then deemed to liquidate, distributing the BC interests to A and B.
(22) In the case of a division using the assets-up form when there are no continuing partnerships, if the prior partnership does not liquidate under local law and, in form, retains certain assets and liabilities, it is deemed to transfer these assets and liabilities to a new resulting partnership under the assets-over form; see Prop.
The prior partnership does not liquidate under the applicable jurisdictional law.