We argue that the use of secret reserves was intended to extend directors' control over BSA's assets by preventing shareholders from monitoring the annual performance of the company.
Buckley, the presiding judge, endorsed the acceptability of internal or secret reserves.
Arthur Chamberlain's reasons for opposing secret reserves were reported in The Times on 2 August 1906.
Similarly, secret reserves may inhibit potential bidders, who suspect that the sellers may have unwarranted expectations and the reserve set too high.
As a check for robustness of results to censoring associated with potential bidders avoiding auctions with secret reserves and high minimum bids, we estimated the models for the subsample of auctions with no reserve and a minimum opening bid less than the sample median of $25.
Alternatively, for a sample of Pokemon cards sold by the authors, Katkar and Lucking-Reiley (2000) find that 46% of auctions with a secret reserve result in a sale, whereas 70% of public reserve auctions result in a sale.
In a field experiment, they auction 50 matched pairs of Pokemon cards on eBay, half with secret reserves and half with equally high public minimum bids.
Lucking-Reiley, Vanderbilt University, "Public versus Secret Reserve Prices on eBay Auctions: Results of a Pokemon Field Experiment"
Napier's article discusses the history of using secret reserves
to manage earnings by some companies in New Zealand.
44) Auction houses also use price guarantees and set secret reserves below which they will not sell the object.
The only harm that would come from waiting to disclose secret reserves is that some bidders will not purchase a piece even though they offered more than anyone else for it.
74) Also, many works of art are subject to a secret reserve, and auction houses will frequently say a fictitious buyer bought a work of art that did not meet its reserve.