The market for corporate control

Jensen, Michael C.; Ruback, Richard S.

doi:10.1016/0304-405x(83)90004-1

Cited by 3,206 publications

(405 citation statements)

References 57 publications

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“…The wealth effects we find are substantially higher than results reported by Campbell et al (2001) and McIntosh et al (1989), although these authors use a market model and do not distinguish between stock and cash payments. Compared to more general corporate finance studies, our results are lower than the 10 to 23% as found by for example Jensen and Ruback (1983) and Servaes (1991). The lower level of our results may well be caused by the homogeneity of assets of real estate companies, which decreases the potential for synergy profits emerging from merged operations.…”

Section: Methodscontrasting

confidence: 96%

How Does the Market for Corporate Control Function for Property Companies?

Eichholtz

Kok

2007

J Real Estate Finan Econ

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We investigate 95 takeovers of property companies all over the world and find that only two of those are hostile. To determine the effectiveness of the market for corporate control, we first study characteristics of targets and acquirers compared to a control sample, using the complete global universe of listed property companies during the most recent takeover wave (1999)(2000)(2001)(2002)(2003)(2004). We find that the inefficient management hypothesis holds for both REITs and non-REITs, as targets exhibit significant underperformance before takeovers. In the second part of this study, we investigate shareholder wealth effects following takeovers and confirm previous findings that abnormal returns for targets and bidders are distinctly different for the real estate sector. Moreover, we show that this difference not only holds for REIT-to-REIT mergers, but also for mergers of real estate firms without a REIT-status.

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Section: Methodscontrasting

confidence: 96%

How Does the Market for Corporate Control Function for Property Companies?

Eichholtz

Kok

2007

J Real Estate Finan Econ

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“…A number of authors, such as Gibson (2002), contend that one of the primary purposes of corporate governance mechanisms is to ensure that poorly performing managers are removed. This view is consistent with Jensen and Ruback (1983), who argue that poorly performing managers who resist removal are arguably the costliest manifestation of agency problems in the firm. Thus, the decision to terminate an unwanted executive can have a large impact on shareholder value and is a very important board decision.…”

Section: Accounting-based Performance Measures In Executive Compensatsupporting

confidence: 85%

The role of information and financial reporting in corporate governance and debt contracting

Armstrong

Guay

Weber³

2010

Journal of Accounting and Economics

1,109

350

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Abstract:We review recent literature on the role of financial reporting transparency in reducing governance-related agency conflicts among managers, directors, and shareholders, as well as in reducing agency conflicts between shareholders and creditors, and offer researchers some suggested avenues for future research. Key themes include the endogenous nature of debt contracts and governance mechanisms with respect to information asymmetry between contracting parties, the heterogeneous nature of the informational demands of contracting parties, and the heterogeneous nature of the resulting governance and debt contracts. We also emphasize the role of a commitment to financial reporting transparency in facilitating informal multi-period contracts among managers, directors, shareholders, and creditors.Keywords: financial accounting; corporate governance; board structure; contracting; executive compensation; debt contracts; informal contracts We thank the following for helpful comments and suggestions:

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“…Furthermore, at least 72% of the 50 sample banks benefited from M&A announcements. This is consistent with empirical finance literature that target firm stockholders earn significant abnormal returns around the M&A announcement period [9]. Table 4 covers test results derived from performing 20 simple regressios.…”

Section: Resultssupporting

confidence: 83%

Does Corporate Governance Affect Target IPO Bank Returns Surrounding M&A Announcements

Chen¹,

Dempere²

2011

IJTEF

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Abstract-This study examines the relationship between corporate governance and cumulative abnormal returns (CARs) associated with target IPO banks surrounding M&A announcements. Several sets of regressions are performed for the investigation. Empirical evidence suggests that a majority of the sample banks benefit from M&A announcements. It further shows that the CARs are significantly, negatively related to board size. Furthermore, the CARs demonstrate persistent, positive connection to D&O insurance coverage, board independence, and D&O ownership. No exception is documented. However, none of the positive relationship is significant at the conventional levels. In contrast, bank size, the control variable, repetitively shows its significant, negative relationship with respect to target bank stock performance around M&A announcements. Thus, target banks with small board and size benefit more from merger and acquisition announcements than their large counterparts.Index Terms-bank size, corporate governance, M&A announcements, target IPO bank returns.

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The market for corporate control

Cited by 3,206 publications

References 57 publications

How Does the Market for Corporate Control Function for Property Companies?

How Does the Market for Corporate Control Function for Property Companies?

The role of information and financial reporting in corporate governance and debt contracting

Does Corporate Governance Affect Target IPO Bank Returns Surrounding M&A Announcements

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