Value creation and corporate diversification: the case of Sears, Roebuck &amp; Co.

Gillan, Stuart L.; Kensinger, John W.; Martin, John D.

doi:10.1016/s0304-405x(99)00046-x

Cited by 51 publications

(21 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, the empirical evidence is mixed. Some studies find that stock returns predict activism (Opler & Sokobin, 1995;Strickland, Wiles, & Zenner, 1996), others find no significant performance effect (Carleton, Nelson, & Weisbach, 1998;Karpoff, Malatesta, & Walkling, 1996;Smith, 1996), while some studies on accounting data indicate that bad performance spurs activism (Bizjak & Marquette, 1998;Gillan, Kensinger, & Martin, 2000;Johnson & Shackell, 1997;Karpoff et al, 1996). Finally, some studies find no significant relation between firm value and activism (Johnson & Shackell, 1997;Smith, 1996;Strickland et al, 1996).…”

Section: Control Variablesmentioning

confidence: 99%

Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

Poulsen

Strand

Thomsen

2010

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type: EmpiricalResearch Question/Issue: This paper analyses the impact of voting power on shareholder activism using unique data on activism at Swedish shareholder meetings. We hypothesize that there is a positive relationship between shareholder activism and a measure of the largest shareholder's sensitivity to increased participation by small shareholders. Research Findings/Insights: We find that firms' amenability to small shareholder influence leads to more proposals by the nomination committee, but fewer proposals by other shareholders and fewer proposals voted against. We interpret this as evidence that the shareholder elected nomination committees effectively channel shareholder concerns and preempt other kinds of activism. In addition, we find more shareholder activity in large firms and less activity in leveraged firms. Theoretical/Academic Implications: This paper offers a new voting power approach to the study of shareholder activism. We show the empirical implications of this approach, but also the importance of local institutions such as nomination committees in shaping the nature of shareholder activism.c org_811 329..343 Practitioner/Policy Implications: Politicians and companies that desire active shareholders could improve the amenability of firms to shareholder influence by ownership transparency, shareholder committees, contacts with shareholder associations and other vehicles for collective action.

show abstract

Section: Control Variablesmentioning

confidence: 99%

Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

Poulsen

Strand

Thomsen

2010

Corporate Governance

View full text Add to dashboard Cite

show abstract

“…For example, Ciccotello and Grant (1999) found much more aggressive monitoring by financiallymotivated shareholder activists for firms with dispersed than concentrated ownership. Also, Gillan, Kensinger, and Martin (2000) provide a detailed case study of Sears, and clearly demonstrated that financial activism was required so as to rectify the poor governance and strategy of that firm in the 1980s and 1990s. Finally, Croci (2007), in his study of shareholder activism by corporate raiders in Europe, found that financially-motivated activists targeted firms in the UK the most of any nation within Europe -one reason of which may be that ownership is most dispersed in that particular economy.…”

Section: Impact Of Ownership Concentration On Financial Activismmentioning

confidence: 99%

Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi‐Country Study

Judge

Gaur

Muller‐Kahle

2010

Corporate Governance

125

122

View full text Add to dashboard Cite

Manuscript Type: EmpiricalResearch Question/Issue: This study seeks to better understand the antecedents of shareholder activism targeted at firms located in three common law countries (i.e., USA, UK, and Australia) and three civil law countries (Japan, Germany, and South Korea) during the 2003-07 time period. Research Findings/Insights: Our findings suggest that the antecedents of shareholder activism vary by the motivation of the activist. We demonstrate that activists target firms with two motives (a) to improve the financial performance, and (b) to improve the social performance of the firm. With respect to the target firm level antecedents, we find that firm size is unrelated to financial activism, but positively related to social activism; ownership concentration is negatively related to both financial and social activism; and prior profitability is negatively related to financial activism, but positively related to social activism. Further, these relationships in the case of financial activism are generally stronger in common law legal systems, whereas those in the case of social activism are generally stronger in environments with a greater level of income inequality. Theoretical/Academic Implications: Our findings suggest that future research should differentiate between the motivations of the activism event. Further, we find that while agency logic works well for financial activism, institutional theory provides stronger explanations for social activism. Overall, we demonstrate the complementary nature of these two theories in explaining shareholder activism. Practitioner/Policy Implications: We found that the "exposure" to shareholder activism varies by the motivation of the activist, and the nature of the firm and its national context. An understanding of these issues would help firms develop proper response strategies to activism events.

show abstract

“…Some evidence on domestic corporate diversification strategy indicates that diversification may not be value enhancing. Denis et al (1997), Berger and Ofek (1994) and Billet and Mauer (2000) show that corporate value losses are attributable to the strategy of business diversification, while studies by Comment and Jarrell (1994), Bengtsson (2000) and Gillan et al (2000), among others, report that corporate refocusing strategies result in value gains.…”

Section: Theoretical Foundationsmentioning

confidence: 99%

Multinational Diversification and Corporate Performance: Evidence from European Firms

Mathur¹,

Singh

Gleason

2004

Euro Fin Management

View full text Add to dashboard Cite

"We investigate the empirical relationship between accounting based measures of performance and the degree of multinational diversification for a set of European chemical industry firms. We find that for these firms, the degree of multinational diversification is strongly related to superior financial performance. The results hold for each of the three sample years. The findings suggest that multinational firms outperform purely domestic and exporting firms. The results provide strong support for gains from multinational diversification. The results indicate that while greater European unification may have eroded potential benefits of exploiting international capital and product market imperfections, the benefits of firm specific economies of scope and scale as well as managerial and financial synergies are still realised through exports." Copyright Blackwell Publishers Ltd, 2004.

show abstract

Value creation and corporate diversification: the case of Sears, Roebuck & Co.

Cited by 51 publications

References 18 publications

Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

Voting Power and Shareholder Activism: A Study of Swedish Shareholder Meetings

Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi‐Country Study

Multinational Diversification and Corporate Performance: Evidence from European Firms

Contact Info

Product

Resources

About