Most stock market experts believe shareholder input is good because it presses managers to do their best to maximize returns. But how does liquidity — the availability of shares to buy and sell — affect that shareholder involvement? “It’s something that has inspired both academic debate and policy debate,” says Wharton finance professor Alex Edmans . When Japan was booming in the 1980s, many market watchers believed the country’s low-liquidity system was a good model. By making it more difficult to buy and sell, it encouraged shareholders to make long-term commitments, giving them a strong incentive to prod managers to perform. In a high-liquidity system like the one in the United States, this view holds, unhappy shareholders can walk away too easily. “One of the views, which was quite prevalent in the 1980s, was that the U.S. having liquid markets was bad because shareholders had a short-term view,” Edmans notes, adding, “They could cut and run.…