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Author: Jared Ian Wilson Publisher: ISBN: Category : Boards of directors Languages : en Pages : 332
Book Description
Corporate governance examines the mechanisms through which managers and directors are incentivized to act in the best interests of shareholders. The three essays of this dissertation focus on internal and external control mechanisms in the CEO and director labor markets and their effectiveness in aligning the interests of mangers, directors and shareholders. The first essay examines the influence of industry shocks and peer firms on board monitoring decisions. Recent evidence documents that industry factors influence CEO turnover decisions, despite agency theory's proposition that boards should filter out industry shocks when evaluating CEO performance. Consistent with industry dynamics affecting board monitoring decisions, I document that industries exhibit CEO turnover waves. During these periods of abnormally high turnover, executives face a heightened threat of discipline as boards increase turnover-performance sensitivity. This increased scrutiny inside waves represents a meaningful managerial incentive that curbs value-destroying behavior of CEOs. Overall, this essay documents the existence of CEO turnover waves, which motivate boards to monitor management differently and have real effects on CEO behavior and shareholder wealth. The second essay examines the shareholder wealth effects associated with a required venue for shareholder litigation. In response to the increased threat of shareholder litigation filed in multiple states, firms have adopted exclusive forum provisions which limit lawsuits to a single venue of the board's choice. It is unclear whether these provisions impose increased costs on shareholders' ability to discipline managers and directors or provide benefits to shareholders by eliminating multi-forum and duplicative lawsuits. I use the Delaware Chancery Court's announcement upholding the adoption of these provisions as a natural experiment to evaluate their wealth implications. Overall, this essay suggests that exclusive forum provisions create value for shareholders by specifying a required venue for corporate litigation. The final essay, with David Becher and Ralph Walkling, examines the stability and composition of acquirer boards around mergers and the director characteristics associated with selection for the post-merger board. Our results indicate that the post-merger board changes substantially and variation is significantly different from both non-merger years and non-merging firms. Adjustments reflect firms upgrading skills associated with executive and merger experience and bargaining between targets and acquirers, rather than agency motives. Conversely, director selection at non-merging firms is driven by general skills and diversity. Our analyses provide insight into the dynamic nature of board structure and characteristics valued in the director labor market.
Author: Jared Ian Wilson Publisher: ISBN: Category : Boards of directors Languages : en Pages : 332
Book Description
Corporate governance examines the mechanisms through which managers and directors are incentivized to act in the best interests of shareholders. The three essays of this dissertation focus on internal and external control mechanisms in the CEO and director labor markets and their effectiveness in aligning the interests of mangers, directors and shareholders. The first essay examines the influence of industry shocks and peer firms on board monitoring decisions. Recent evidence documents that industry factors influence CEO turnover decisions, despite agency theory's proposition that boards should filter out industry shocks when evaluating CEO performance. Consistent with industry dynamics affecting board monitoring decisions, I document that industries exhibit CEO turnover waves. During these periods of abnormally high turnover, executives face a heightened threat of discipline as boards increase turnover-performance sensitivity. This increased scrutiny inside waves represents a meaningful managerial incentive that curbs value-destroying behavior of CEOs. Overall, this essay documents the existence of CEO turnover waves, which motivate boards to monitor management differently and have real effects on CEO behavior and shareholder wealth. The second essay examines the shareholder wealth effects associated with a required venue for shareholder litigation. In response to the increased threat of shareholder litigation filed in multiple states, firms have adopted exclusive forum provisions which limit lawsuits to a single venue of the board's choice. It is unclear whether these provisions impose increased costs on shareholders' ability to discipline managers and directors or provide benefits to shareholders by eliminating multi-forum and duplicative lawsuits. I use the Delaware Chancery Court's announcement upholding the adoption of these provisions as a natural experiment to evaluate their wealth implications. Overall, this essay suggests that exclusive forum provisions create value for shareholders by specifying a required venue for corporate litigation. The final essay, with David Becher and Ralph Walkling, examines the stability and composition of acquirer boards around mergers and the director characteristics associated with selection for the post-merger board. Our results indicate that the post-merger board changes substantially and variation is significantly different from both non-merger years and non-merging firms. Adjustments reflect firms upgrading skills associated with executive and merger experience and bargaining between targets and acquirers, rather than agency motives. Conversely, director selection at non-merging firms is driven by general skills and diversity. Our analyses provide insight into the dynamic nature of board structure and characteristics valued in the director labor market.
Author: Zheng Liu Publisher: ISBN: 9781361330623 Category : Languages : en Pages :
Book Description
This dissertation, "Two Essays on Corporate Activities and the Market for Corporate Control" by Zheng, Liu, 刘峥, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This dissertation addresses concerns regarding corporate activities in relation to agency costs and studies the effect of the market for corporate control. In the first essay, we use the mid-1990s Delaware takeover regime shift as an exogenous shock to examine how the removal of takeover threats affects managerial decisions on corporate financing and investment and how it affects firm value. Based on a differences-in-differences-in-differences (DDD) approach, we find that managers reduce debt financing and increase capital investment when they are protected against hostile takeovers, which is consistent with managerial agency models of capital structure and the free cash flow hypothesis proposed by Jensen (1986). We demonstrate that engaging in these entrenched behaviors consequently destroys firm value. Moreover, our evidence indicates that the effect of the takeover regime shift is more pronounced in firms with fewer institutional holdings or lower managerial ownership, supporting the argument of Jensen (1993) that effective internal control systems can alleviate the negative outcomes of a weakened market for corporate control. The substitution effect of internal controls is more substantial than that of the external product market competition. Finally, we determine that empire building, rather than quiet life, is the main consequence of a weakened market for corporate control. In the second essay, we directly examine the causal relationship between managerial entrenchment and diversification. We demonstrate that more entrenched managers adopt higher levels of diversification than do less entrenched managers. We verify the result by using two-stage least squares (2SLS) regression and treating entrenchment as endogenous. In addition, based on an exogenous change in takeover legislation in Delaware in the mid-1990s, we adopt the differences-in-differences-in-differences (DDD) approach and demonstrate that managers increase diversification activities when they are protected against hostile takeovers. Given that diversification destroys value, these results are consistent with the agency costs explanation of diversification. We then explore the motivations that drive managers to diversify. We document that entrenched managers diversify to gain private benefits and to reduce firm risk. Finally, we demonstrate that CEO equity-based incentives increase when takeover-protected firms diversify, suggesting that firms proactively respond to counterbalance the increased costs associated with discretional diversification, which is consistent with theories of optimal contract. DOI: 10.5353/th_b5153698 Subjects: Capital investments Corporate governance Corporations - Finance
Author: Ms. Nadya Malenko Publisher: ISBN: Category : Languages : en Pages :
Book Description
This dissertation provides a theoretical analysis of several corporate governance mechanisms in the presence of information asymmetries and agency conflicts between shareholders, managers, and directors. The first essay of the dissertation analyzes decision-making in corporate boards and studies how board characteristics and the design of board meetings affect board decisions. Two other essays are on shareholder activism. The second essay focuses on voting for non-binding shareholder proposals and examines its effectiveness in conveying shareholder views to the management. The third essay considers another common form of shareholder activism, private negotiations with the management, and studies the activist's choice between private negotiations and public confrontation. The first essay, "Communication and Decision-Making in Corporate Boards, " develops a theory of communication and collective decision-making in a board of directors whose members have private information about the issue under discussion. The key element of the model is that the quality of board communication is endogenous, because it depends on the time and effort directors are willing to put into communicating their information to others. Directors may have biases regarding the decision and may be reluctant to disagree with the prevailing opinion in the boardroom. I show that when effective communication is personally costly for directors, both stronger preferences for conformity and stronger biases may improve the board's decisions because directors will have stronger incentives to convince others of their position. These results have implications for the design of board policies, including the use of open vs. secret ballot voting, the establishment and composition of committees, and the frequency of executive sessions of outside directors. The second essay, "Non-Binding Voting for Shareholder Proposals, " which is co-authored with Doron Levit and is forthcoming in the Journal of Finance, considers another setting where information relevant for the firm's decisions is dispersed among many agents, namely, the firm's large shareholders. Our main question is whether voting for non-binding shareholder proposals fulfills its intended role of conveying shareholders' expectations to the management. We show that when the interests of the manager and shareholders are not aligned, non-binding voting generally fails to convey shareholder views to the manager. This distinguishes voting for non-binding proposals from standard voting for binding proposals, where some information is always conveyed. In practice, the effectiveness of shareholder proposals may be affected by external governance mechanisms, such as the market for corporate control in the form of activist investors. Our analysis demonstrates that the presence of an activist investor can enhance the advisory role of non-binding voting only if there is substantial conflict of interest between the activist and shareholders. Although shareholder proposals have become increasingly common in recent years, submitting a proposal to a shareholder vote is often viewed by activist investors as a tactic of last resort. According to survey evidence, activists generally try to achieve their objectives through private negotiations with the management and use confrontational tactics only if these negotiations are not successful. The third essay, "Behind-the-Scene Negotiations in Shareholder Activism, " examines under which circumstances negotiations between the activist and the management fail. I study these negotiations in a bargaining framework where the manager is privately informed about his private benefits. The model provides implications for the likelihood of proposal withdrawals and announcement effects of proposal submissions. It demonstrates, in particular, that the announcement of an activist's intervention may have a negative price effect even if the intervention is known to be beneficial to the company.
Author: Tih Koon Tan Publisher: ISBN: Category : Chief executive officers Languages : en Pages : 83
Book Description
This dissertation is composed by two essays that explore corporate governance issues in S & P firms. The first essay examines changes in corporate governance after a firm gets added to the S & P 500 index? Using firms added from 1994 to 2007, this paper examines how governance mechanisms change for these firms. Specifically, I look at both the overall governance and details on how each mechanism changes. I find that governance improves after being added to the index. Controlling for firm size, leverage, prior firm performance, and growth opportunities, the market reacts positively to governance improvements as a whole. In addition, changes in governance are positively associated with changes in operating performance. In the second essay, the departure of a CEO often raises questions about who will replace him/her. This study examines the homogeneity/heterogeneity nature of the internal labor market using a novel measure, a heterogeneity index, which captures the concentration of executive compensation levels. I find that a more homogeneous internal labor market is associated with (1) a greater likelihood of an internal replacement, (2) a higher probability of a CEO turnover, and (3) a bigger tournament prize. In addition, the negative performance-turnover relationship is strengthened by a more homogeneous internal labor market. The heterogeneity index seems to proxy for internal labor market competition.
Author: Peter A. Gourevitch Publisher: Princeton University Press ISBN: 1400837014 Category : Business & Economics Languages : en Pages : 365
Book Description
Why does corporate governance--front page news with the collapse of Enron, WorldCom, and Parmalat--vary so dramatically around the world? This book explains how politics shapes corporate governance--how managers, shareholders, and workers jockey for advantage in setting the rules by which companies are run, and for whom they are run. It combines a clear theoretical model on this political interaction, with statistical evidence from thirty-nine countries of Europe, Asia, Africa, and North and South America and detailed narratives of country cases. This book differs sharply from most treatments by explaining differences in minority shareholder protections and ownership concentration among countries in terms of the interaction of economic preferences and political institutions. It explores in particular the crucial role of pension plans and financial intermediaries in shaping political preferences for different rules of corporate governance. The countries examined sort into two distinct groups: diffuse shareholding by external investors who pick a board that monitors the managers, and concentrated blockholding by insiders who monitor managers directly. Examining the political coalitions that form among or across management, owners, and workers, the authors find that certain coalitions encourage policies that promote diffuse shareholding, while other coalitions yield blockholding-oriented policies. Political institutions influence the probability of one coalition defeating another.
Author: Olubunmi Ibikunle Faleye Publisher: National Library of Canada = Bibliothèque nationale du Canada ISBN: Category : Antitakeover strategies Languages : en Pages : 256
Author: Tarek El Masri Publisher: ISBN: Category : Languages : en Pages : 171
Book Description
This dissertation is comprised of three essays on issues related to the corporate governance of family firms. The first essay explores how owners-managers of family firms conceptualize and define their firms. Understanding the essence of a family firm helps us better understand their governance and behaviour. This essay contributes to the family business literature by presenting the seven most important criteria in identifying a family business (Handler 1989; Shanker & Astrachan 1996), namely: family ownership, control, involvement, succession, long-term vision, founders' legacy, and extended family of employees. The essay also contributes a familiness measurement tool that can be used in future research aiming at better understanding the family firm. The second essay investigates how management control technologies are calibrated in accordance with the sometimes conflicting economic and noneconomic goals resulting from the dual identities of family firms. The results show that family firms calibrate pervasive management control technologies, such as calculative, family-centric or procedural controls to strengthen the business identity and reduce the family identity of their family business. In comparison, the minimal use, or perceived absence, of management control technologies suggest that it accentuates and fosters family identity. Hence, reverting to management control technologies becomes related in a unilateral way to the business identity of the firm, despite the dual control ambition of family firms. The third essay analyzes CEO and TMT compensation practices to identify patterns that can explain the gap between family firms and the pool of external highly qualified executives. The data analysis highlights a connection between the degree of family ownership, the composition of the BOD, and the identity of the CEO. The results also show that family firms rely more heavily on cash-based awards than on equity-based awards as a form of CEO and TMT compensation. Family firms are reluctant to use option-based rewards and the use of share-based awards is also kept at a minimum. Other evidence point towards a role that institutional ownership plays in restructuring the compensation packages of the TMTs at family firms. Keywords: Family Firms, Definition of Family Firms, Family Firm Identity, Management Control Technologies, Corporate Governance, Executive Compensation.
Author: Jared Ian Wilson
Author: Jared Ian Wilson
Author: Syed Walid Reza
Author: Zheng Liu
Author: Olubunmi Ibikunle Faleye
Author: Ms. Nadya Malenko
Author: Roma Alexandra Jakiwczyk
Author: Tih Koon Tan
Author: Peter A. Gourevitch![Essays in Corporate Governance and Control [microform] PDF](https://books.google.com/books/content/images/frontcover/bFLzSgAACAAJ?fife=w80-h100)
Author: Olubunmi Ibikunle Faleye
Author: Tarek El Masri