Results 11 - 20
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417
Governance with poor investor protection: Evidence from top executive turnover in Italy
- Journal of Financial Economics
"... Abstract This paper analyzes executive turnover and firm valuation in Italy, a country that features all the characteristics of the most common governance structure around the world, as described by La Porta, et al. (1999): low legal protection for investors, firms with large controlling shareholde ..."
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Cited by 75 (4 self)
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Abstract This paper analyzes executive turnover and firm valuation in Italy, a country that features all the characteristics of the most common governance structure around the world, as described by La Porta, et al. (1999): low legal protection for investors, firms with large controlling shareholders and pyramidal groups. The main findings are that turnover is significantly lower and unaffected by performance when the controlling shareholder of the firm is also a top executive in the firm, while it is more sensitive to performance when control is, to some extent, contestable and when the controlling shareholder owns a larger fraction of the firm's cash-flow rights. The results on valuation are the mirror image of those on turnover: the firm's Q is lower for companies with the controlling shareholder as a top executive, larger when a voting syndicate controls the firm, and increases with the fraction of cash-flow rights owned by the controlling shareholder. JEL classification: G34, J63, L14.
Restoring Trust After Fraud: Does Corporate Governance Matter? The Accounting Review
"... This paper is adapted from my dissertation completed at Cornell University. I would like to thank my committee chairperson, Julia D’Souza, for her unwavering support and guidance in the development of this ..."
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Cited by 73 (0 self)
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This paper is adapted from my dissertation completed at Cornell University. I would like to thank my committee chairperson, Julia D’Souza, for her unwavering support and guidance in the development of this
The Determinants of Board Structure at the Initial Public Offering
- Journal of Law and Economics
"... This paper describes board size and composition and investigates the role of venture capital in a sample of 1,116 IPO firms. First, venture capital-backed firms have fewer insider and instrumental directors and more independent outsiders. Second, we consider board composition as the outcome of a bar ..."
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Cited by 71 (1 self)
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This paper describes board size and composition and investigates the role of venture capital in a sample of 1,116 IPO firms. First, venture capital-backed firms have fewer insider and instrumental directors and more independent outsiders. Second, we consider board composition as the outcome of a bargain between the CEO and outside shareholders. Representation of independent outsiders on the board decreases with the power of the CEO- tenure and voting control- and increases with the power of outside investors- venture capital backing and venture firm reputation. Third, within the sample of venture financed firms and also consistent with a bargaining model, the probability that a founder remains as CEO is decreasing in venture firm reputation. Finally, we examine the influence of venture capital backing and board structure on firm outcomes in the ten years after the IPO.
CEO compensation and incentives: Evidence from M&A bonuses.
- Journal of Financial Economics,
, 2004
"... Abstract We investigate CEO compensation for completing M&A deals. 39% of the acquiring firms in our sample state that they compensate their CEOs for completing the deal, and that the compensation comes mainly in the form of a cash bonus. We find that CEOs who have more power to influence board ..."
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Cited by 61 (2 self)
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Abstract We investigate CEO compensation for completing M&A deals. 39% of the acquiring firms in our sample state that they compensate their CEOs for completing the deal, and that the compensation comes mainly in the form of a cash bonus. We find that CEOs who have more power to influence board decisions receive significantly larger bonuses. We also find a positive relation between bonus compensation and measures of effort, but not between bonus compensation and deal performance. CEOs with more power also tend to engage in larger deals relative to the size of their own firms, and the market responds more negatively to their acquisition announcements. Our evidence is consistent with the argument that managerial power is the primary driver of M&A bonuses. JEL Classification: G34; J33 Key Words: CEO Compensation, Mergers and Acquisitions We gratefully acknowledge the insightful comments and suggestions made by an anonymous referee,
Venture Capital and Corporate Governance in the Newly Public Firm,” Working paper
, 2002
"... This paper examines the effects of venture capital backing on the corporate governance of the firm following the IPO. I conduct three independent sets of tests examining effectively how governance and monitoring might differ for venture- and non-venture-backed firms. First, I find that venture-backe ..."
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Cited by 53 (3 self)
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This paper examines the effects of venture capital backing on the corporate governance of the firm following the IPO. I conduct three independent sets of tests examining effectively how governance and monitoring might differ for venture- and non-venture-backed firms. First, I find that venture-backed firms have lower earnings management, as measured by the level of their discretionary accounting accruals, than similar nonventure-backed firms. Second, venture-backed firms experience a significantly higher wealth effect upon the announcement of the adoption of a shareholder rights agreement (poison pill) than non-venture-backed
Entrepreneurship in Medium-Size Companies: Exploring the Effects of Ownership and Governance Systems
- Journal of Management
, 2000
"... Corporate entrepreneurship (CE), which embodies a company’s innovation and venturing activities, is necessary in today’s competitive markets. CE is important for organizational renewal, the creation of new business, and improved performance. CE, however, requires strong and continued support from th ..."
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Cited by 38 (6 self)
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Corporate entrepreneurship (CE), which embodies a company’s innovation and venturing activities, is necessary in today’s competitive markets. CE is important for organizational renewal, the creation of new business, and improved performance. CE, however, requires strong and continued support from the company’s top executives. Data from 231 medium-size manufacturing companies show that commitment to CE is high when: (1) executives own stock in their company; (2) the board chair and the chief executive officer are different individuals; (3) the board is medium in size; and, (4) outside directors own stock in the company. The relationships between the ratio of outside directors and CE, and institutional ownership and CE, are mixed. CE is also posi-tively associated with future company performance. © 2000 Elsevier Science Inc. All rights reserved. Rising global and domestic competition has increased the importance of corporate entrepreneurship (CE) for successful firm performance (Fujita, 1997b; Nakahara, 1997). CE, the sum of a company’s venturing and innovation activities (Guth & Ginsberg, 1990), can help the firm acquire new capabilities (Stopford & Baden–Fuller, 1994) and improve its performance (Lumpkin & Dess, 1996). It can also help the firm enter new businesses (Miller, 1983; Zahra, 1993) and develop new revenue streams in both domestic and foreign markets (Block & MacMillan, 1993). CE is also conducive to improved profitability (Covin &
An Integrated Framework of Corporate Governance and Firm Valuation – Evidence from Switzerland’, ECGI – Finance Working Paper No
"... Recent empirical work shows evidence of a positive relationship between firm-specific corporate governance and firm valuation, as measured by Tobin’s Q. Instead of looking at a single control mechanism, we use a broad corporate governance index and additional variables related to ownership structure ..."
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Cited by 35 (4 self)
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Recent empirical work shows evidence of a positive relationship between firm-specific corporate governance and firm valuation, as measured by Tobin’s Q. Instead of looking at a single control mechanism, we use a broad corporate governance index and additional variables related to ownership structure, board characteristics, and leverage to provide a comprehensive description of firm-level corporate governance for a broad sample of Swiss firms. To avoid a problem inherent in most of the previous literature, we carefully control for the endogeneity of these control mechanisms. We develop a system of simultaneous equations, where all control mechanisms are allowed to affect each other as well as Tobin’s Q, while at the same time Tobin’s Q is also allowed to affect the choice of each mechanism. Our results support the widespread hypothesis of a positive relationship between corporate governance and Tobin’s Q. An increase in our corporate governance index by one point (where the index ranges from 1 to 100) causes an increase of the market capitalization by roughly 8%, on average, of a company’s book asset value. We also report a number of other interesting results on the relationship between Tobin’s Q and the different control
Firm value and managerial incentives: A stochastic frontier approach
- Journal of Business
, 2005
"... We thank Tim Coelli for his continued help throughout this project; seminar participants ..."
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Cited by 35 (0 self)
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We thank Tim Coelli for his continued help throughout this project; seminar participants
Do financial conglomerates create or destroy economic value
- Journal of Financial Intermediation
, 2009
"... This paper investigates whether functional diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Based on a U.S. dataset comprising approximately 4,060 observations covering the period 1985-2004, we report a substantial and persistent conglomerate ..."
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Cited by 35 (5 self)
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This paper investigates whether functional diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Based on a U.S. dataset comprising approximately 4,060 observations covering the period 1985-2004, we report a substantial and persistent conglomerate discount among financial intermediaries. The study differs materially from earlier work on scope dimensions of financial institution structures. Our results suggest that it is diversification that causes the discount, and not that troubled firms diversify into other more promising areas. In addition, the discount applies to all financial services industries with the exception of investment banking and is stable over different combinations of financial activ-ity-areas with the exception of commercial banking units combined with insurance companies and/or investment banking activities. Finally, our results reveal that geographic diversification per se is not associated with a significant discount. Although geographic diversity is value de-stroying in all financial services activity-areas when there are more geographic segments and the
Governance and boards of directors in closed-end investment companies, Working paper
, 2000
"... We analyze whether board structure and director independence in closed-end investment companies are related to shareholder interests in ways that are consistent with boards being effective monitors. We report that funds with relatively low expense ratios, one measure of board effectiveness, have sma ..."
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Cited by 34 (0 self)
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We analyze whether board structure and director independence in closed-end investment companies are related to shareholder interests in ways that are consistent with boards being effective monitors. We report that funds with relatively low expense ratios, one measure of board effectiveness, have smaller boards, a higher proportion of board members who are legally considered independent, relatively low director compensation, and charter provisions that specify remedial action if discounts become large. Evidence from our analysis of major fund restructuring decisions, including share repurchases, open-ending proposals and right offerings, is largely consistent with the expense ratio analysis. Overall, board characteristics that we identify with effective board independence are associated with lower expense ratios and value-enhancing restructurings.
