The Market for Corporate Control: The Scientific Evidence

Ruback, Richard S.; Jensen, Michael C.

doi:10.2139/ssrn.244158

Cited by 1,034 publications

(1,201 citation statements)

References 60 publications

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“…We also note that the management ownership (MOW) and overinvestment (OINV) are not significant in the above models where their effects on diversification as measured by ENTROPY are negative. These results, invalidates our hypotheses H4 and H5 and confirm the study conducted by Morck et al (1988), Jensen and Ruback (1983) who find that the participation of the leader is negatively related with the strategic choice of the company.…”

Section: Test 2: Impact Of Entrechment Behavior Of the Company's Divesupporting

confidence: 70%

“…However, several studies have found that when management ownership is higher, firms ar less diversified. According Morck, Shleifer, and Vishny (1988), Jensen and Ruback (1983), the relationship between the CEO ownership and firm diversification strategy is non linear and is inclined to be more negative. We measure this variable as a dummy variable taking the value of 1 if the manager holds shares in the company and the value 0 otherwise.…”

Section: -Management Ownership (Mow)mentioning

confidence: 99%

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Corporate Board Characteristics, Managerial Entrenchment and Diversification Strategy: Evidence from Tunisian Context

Marouan¹

2015

IJBM

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The aim of this paper is to analyze the role of the board of directors and the management entrenchment in the explanation of diversification strategy of the Tunisian firms. In particular we focus on the characteristics of these two opposite directions bodies where the first controls the second in explaining the strategic choices of the firm. We find evidence for the negative effect of the board size and outside directors on the diversification strategy of the firm. The empirical result points also the negative effect of the CEO duality, which is inconsistent with the agency hypothesis.

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Section: Test 2: Impact Of Entrechment Behavior Of the Company's Divesupporting

confidence: 70%

Section: -Management Ownership (Mow)mentioning

confidence: 99%

Corporate Board Characteristics, Managerial Entrenchment and Diversification Strategy: Evidence from Tunisian Context

Marouan¹

2015

IJBM

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“…It is the arena in which alternative management teams compete for the rights to manage corporate resources (Jensen and Ruback, 1983). Understanding this point is crucial to understanding much of the rhetoric about the effects of hostile takeovers.…”

Section: The Market For Corporate Controlmentioning

confidence: 99%

“…Most of the earlier work is well summarized elsewhere ( ' Jensen and Ruback, 1983;Jarrell, Brickley and Netter in this symposium). Here, I focus on current aspects of the controversy.…”

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confidence: 99%

Takeovers: Their Causes and Consequences

2003

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“…It disciplines the management, since poor performance increases the threat of a takeover and raises the probability that the incumbent managers loose their job (Manne, 1965). For this reason, Jensen and Ruback (1983) regard the takeover market as part of the managerial labour market on which different management teams compete for the rights of managing corporate resources. Owing to regulations on entry, mergers, takeovers and administrative rules the power of the market for corporate control to discipline the management is lower in the banking sector than in the non-financial sector (Prowse, 1995).…”

Section: Systems Of Corporate Governance In the German Banking Sectormentioning

confidence: 99%

Corporate Governance and Current Regulation in the German Banking Sector: An Overview and Assessment

Köhler

2010

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10002.pdf Non-Technical SummaryThe recent financial crisis has put the German banking sector under enormous pressure. Besides the macroeconomic drivers like, for example, the expansionary monetary policy in major countries, insufficient risk management and weak corporate governance systems have been identified as the main reasons for the financial crisis.In Germany, corporate governance is weakened by the three-pillar structure of the German banking system that reduces the power of market for corporate control. Furthermore, the large ownership stake of the government in the German banking sector weakens corporate governance, since government officials may have other interests than private shareholders and may be less motivated to monitor the management. Politicians may also be less educated and experienced to fulfil their role as monitor of bank managers. This corresponds to the results of a recent OECD report on corporate governance in the financial sector (Kirkpatrick, 2009). The report identifies adverse incentives created by remuneration schemes together with insufficient monitoring by the supervisory board as one of the main reasons for the financial crisis.To improve corporate governance the German government has started several initiatives in the past two years. They mainly focus on improving the risk management of banks, on reducing the incentives for managers to increase short-term profits created by remuneration schemes and on further professionalizing the supervisory board. To reduce the incentives to take large risks, remuneration schemes for managers must, for example, in future be geared toward long-term performance and also reflect negative business trends, while the supervisory board must, henceforth, include at least one person that has the required knowledge, abilities and expert experience to properly fulfil his monitoring tasks. This should particularly improve corporate governance in the public sector where members of the supervisory boards are often based on their political affiliation and not based on their experience and skills.Problematic is that several laws that were enacted in the past years to improve corporate governance focus on listed firms. Furthermore, the recommendations and suggestions made by the German Corporate Governance Code are not legally binding even for stock corporations. In particular, most Landesbanken have so far abstained fro...

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The Market for Corporate Control: The Scientific Evidence

Cited by 1,034 publications

References 60 publications

Corporate Board Characteristics, Managerial Entrenchment and Diversification Strategy: Evidence from Tunisian Context

Corporate Board Characteristics, Managerial Entrenchment and Diversification Strategy: Evidence from Tunisian Context

Takeovers: Their Causes and Consequences

Corporate Governance and Current Regulation in the German Banking Sector: An Overview and Assessment

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