Financial industry megamergers and policy challenges
In the past few years, the pace of consolidation in the banking industry has accelerated, and combinations between banks and other financial service providers have become increasingly prevalent. In some countries, consolidation has resulted from the need to eliminate weak or problem institutions. More generally, however, the unprecedented wave of merger activity in financial services is being driven by powerful changes in telecommunications and information technology and by the removal of legal and regulatory barriers to national and international linkages. An important recent development is ...
Studies on corporate leverage
Should states restrict takeovers?
The merger boom: an overview
Inside the market for private businesses
The effects of corporate antitakeover provisions on long-term investment: empirical evidence
This paper's empirical results indicate that the average effect of antitakeover provisions on subsequent long-term investment is negative. The interpretation of these results depends on whether one thinks that there was too much, too little, or just the right amount of long-term investment prior to the antitakeover provision adoption. We use agency theory to devise more refined empirical test of the effects of antitakeover provision adoptions by managers in firms with different incentive and monitoring structures. Governance variables (e.g., percentage of outsiders on corporate boards, and ...
New evidence on the effectiveness of the proxy mechanism
The proxy fight literature to date has focused exclusively on proxy fights that progress to a shareholder vote or near-shareholder vote stage. In contrast, this paper uses a sampling methodology which retains all cases where a proxy fight is threatened, whether or not a vote eventually occurs. Less than one half of threatened proxy fights ultimately result in a shareholder vote. Votes are avoided in three-fourths of dropped contests when the target firm agrees to be acquired, reaches a settlement with the dissident, or restructures to the dissident' s satisfaction. These avoided contests are ...
The differential impact on stockholder wealth of various antitakeover provisions
This paper examines the relationship between the passage of six types of corporate antitakeover provisions (supermajority, classified boards, fair-price, reduction in cumulative voting, anti-greenmail and poison pills) and stockholder wealth. Our event study from a sample of 38l firms that adopted 486 antitakeover provisions in the 1984-1988 period indicates a strongly negative effect on stockholder wealth, supporting the management entrenchment view of antitakeover provisions. Moreover, the empirical results of this paper indicate that the market reacts equally negatively to both ...
Board structure, antitakeover provisions, and stockholder wealth
This paper's regression analyses from a sample of 261 firms that adopted 486 antitakeover provisions (supermajority, classified boards, fair-price, reduction in cumulative voting, anti-greenmail and poison pills) in the 1984-1988 period indicate that the negative market reactions to antitakeover provisions vary depending on firms' board structures. This paper's empirical evidence indicates that while separating the positions of CEO and chairperson of the board reduces the negative effect, increased outsider representation increases negative market reactions.