Do hostile takeover threats matter? Evidence from credit ratings

Chatjuthamard, Pattanaporn; Ongsakul, Viput; Jiraporn, Pornsit

doi:10.1371/journal.pone.0260688

Cited by 8 publications

(7 citation statements)

References 79 publications

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“…In line with prior research (Cain et al, 2017;Chatjuthamard et al, 2020;Ongsakul et al, 2021aOngsakul et al, , 2021bOngsakul et al, , 2021cOngsakul et al, , 2021dChatjuthamard et al, 2022), we measure takeover vulnerability using the hostile takeover index. This measure has the significant advantage of being based on plausibly exogenous variables.…”

Section: The Hostile Takeover Indexmentioning

confidence: 99%

“…This hypothesis posits that more takeover threats lead to stronger corporate culture. The disciplinary mechanism of the takeover market prevents managers from deviating from the goal of maximizing shareholder wealth (Cain et al , 2017; Chatjuthamard et al , 2022). Consequently, managers more subject to takeover threats are forced to adopt investments and policies that enhance shareholder wealth in the long run, including promoting strong corporate culture.…”

Section: Prior Research and Theoretical Backgroundmentioning

confidence: 99%

“…The hostile takeover index has gained widespread acceptance in recent scholarship. For instance, the hostile takeover index has been used to investigate how takeover vulnerability influences several outcomes, such as executive risk-taking incentives (Ongsakul et al , 2020), female board representation (Chatjuthamard et al , 2021), innovation efficiency (Ongsakul et al , 2021a, 2021b, 2021c, 2021d) and credit ratings (Chatjuthamard et al , 2022).…”

Section: Sample Construction and Data Descriptionmentioning

confidence: 99%

“…Finally, we contribute to a growing body of research that uses the hostile takeover index as an exogenous proxy for takeover vulnerability. This particular index was first developed by Cain et al (2017) and subsequently adopted by several studies to explore the impacts of takeover vulnerability on executive risk-taking incentives (Ongsakul et al , 2020), female board representation (Chatjuthamard et al , 2021), innovation efficiency (Ongsakul et al , 2021a, 2021b, 2021c, 2021d) and credit ratings (Chatjuthamard et al , 2022), for example. While this field is still in its infancy, it is an intriguing one that will probably generate significant research in the future due to the scarcity of exogenous changes in takeover exposure.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls

Chatjuthamard,

Chintrakarn,

Papangkorn

et al. 2023

IJAIM

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Purpose Exploiting an innovative measure of corporate culture based on machine learning and earnings conference calls, this study aims to investigate how corporate culture is influenced by hostile takeover threats. To sidestep endogeneity, this study uses a unique measure of takeover vulnerability principally based on the staggered implementation of state legislations, which are plausibly exogenous. Design/methodology/approach In addition to the standard regression analysis, this study also executes a variety of other empirical tests such as propensity score matching, entropy balancing and an instrumental variable analysis, to demonstrate that the results are robust. The final sample includes 27,663 firm-year observations from 4,092 distinct companies from 2001 to 2014. Findings This study documents that more takeover exposure weakens corporate culture considerably, consistent with the managerial myopia hypothesis. Threatened by the takeover risk, managers tend to behave myopically and are less likely to make long-term investments that promote strong corporate culture in the long run. Additional analysis focusing on a culture of innovation, which is especially vulnerable to managerial myopia, produces similar evidence. Originality/value To the best of the authors’ knowledge, this study is the first to explore the effect of takeover susceptibility on corporate culture using a distinctive metric of corporate culture based on textual analysis.

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Section: The Hostile Takeover Indexmentioning

confidence: 99%

Section: Prior Research and Theoretical Backgroundmentioning

confidence: 99%

Section: Sample Construction and Data Descriptionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls

Chatjuthamard,

Chintrakarn,

Papangkorn

et al. 2023

IJAIM

Self Cite

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“…Thus, the takeover index measures consistent hostile related takeovers. Recent scholars who adopted this hostile takeover index are Chatjuthamard et al (2022) and Ongsakul et al (2022).…”

Section: Measuring Hostile Takeovermentioning

confidence: 99%

Do Takeover Threats Stifle or Promote Managerial Efforts to Innovate? Evidence from Takeover Vulnerability, and Text-Based Measure of Innovation

Denlertchaikul

Chatjuthamard

Jiraporn

et al. 2022

Administrative Sciences

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Although the role of managers is crucial in shaping firm innovation, it also poses a dilemma. Because innovation is a complicated and long-term process that requires effort and attention, managers may reduce effort in innovation when faced with high takeover threat. This study examines the effects of hostile takeover threats on managerial efforts to innovate. Our results show that more active hostile takeover markets stifle managerial efforts in corporate innovation. The findings suggest that managers tend to be more myopic when firms are exposed to hostile takeover threats. Managers will put less effort into innovation to counter the risk of being dismissed as the expected payoff from such investment is long-term and highly uncertain. Additional robustness checks confirm the results, including random-effects regressions, an alternative measure of innovation, and two instrumental-variable analyses.

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Climate change exposure and the takeover market: A text‐based analysis

Chindasombatcharoen,

Chatjuthamard,

Jiraporn

et al. 2024

Bus Strat Env

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We examine the impact of takeover vulnerability on firm‐specific climate change exposure using sophisticated text‐based metrics generated from machine learning algorithms and a measure of takeover vulnerability primarily derived from state takeover laws. Based on a large sample of more than 28,000 observations, our findings show that firms more vulnerable to hostile takeovers have higher exposure to physical climate risks, as managers focus on short‐term financial performance over long‐term risk mitigation. These firms also reduce regulatory risk exposure by adopting stringent compliance measures and improving environmental practices to avoid penalties and attract investors. However, they are less likely to invest in new business opportunities related to climate change, prioritizing stability over potential gains in new business opportunities. Propensity score matching and entropy balancing confirm the robustness of these results. Our research provides insights into how hostile takeover threats influence corporate environmental strategies.

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Do hostile takeover threats matter? Evidence from credit ratings

Cited by 8 publications

References 79 publications

Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls

Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls

Do Takeover Threats Stifle or Promote Managerial Efforts to Innovate? Evidence from Takeover Vulnerability, and Text-Based Measure of Innovation

Climate change exposure and the takeover market: A text‐based analysis

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