Separation of ownership and control is the main governance problem facing the modern corporation (Adam Smith, 1776, Berle and Means, 1932, Jensen and Meckling, 1976). With no one to care for passive outside investors, large and liquid companies should not exist. I hypothesize that informed speculators fulfill this role by monitoring management. Indeed, in the manager’s optimal contract, I show that stock price weight (inside ownership) must fall with more informative stock prices and scale. Holmstrom and Tirole (1993) seems to rule out this monitoring explanation by its (false) finding that monitoring gives rise to high- not low-powered incentives.
所有权和控制权的分离是现代公司面临的主要治理问题(Adam Smith, 1776; Berle and Means, 1932; Jensen and Meckling, 1976)。由于没有人关心被动的外部投资者，大型、流动性强的公司就不应该存在。我假设，知情的投机者通过监督管理层来履行这一角色。事实上，在管理者的最优契约中，我证明了股价权重(内部所有权)必须随着股价和规模的信息增加而下降。霍尔姆斯特罗姆和梯若尔(1993)似乎通过其(错误的)发现排除了这种监督解释，即监督会产生高而非低权力的激励。
{"title":"Why Do Agency Theorists Misinterpret Market Monitoring?","authors":"P. Swan","doi":"10.2139/ssrn.3142962","DOIUrl":"https://doi.org/10.2139/ssrn.3142962","url":null,"abstract":"Separation of ownership and control is the main governance problem facing the modern corporation (Adam Smith, 1776, Berle and Means, 1932, Jensen and Meckling, 1976). With no one to care for passive outside investors, large and liquid companies should not exist. I hypothesize that informed speculators fulfill this role by monitoring management. Indeed, in the manager’s optimal contract, I show that stock price weight (inside ownership) must fall with more informative stock prices and scale. Holmstrom and Tirole (1993) seems to rule out this monitoring explanation by its (false) finding that monitoring gives rise to high- not low-powered incentives.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121213272","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
India is a developing nation where business firms related to telecom area, basic equipment etc., needed for a business or society to operate is at a developing stage. But after when lots of countries communicate and talk with each other which happened in the year 1991, when was opened up to the world and the international companies were allowed to do business in the country and invest in different parts and areas, the situation of industrial development has seen a sea-change. When Huge Companies are allowed by the government, there is bound to be extreme increase in the competition in domestic market. Each company tries its level best to prove itself in the market. They work for profit and profit becomes the very basic need for the organizations which are working in the country. But with the change in time and increase in the level of reading and writing ability rate, people who use a product or service become more and more aware and understand different things happening around them. With these changes another new idea comes out and became visible in the market which is called corporate social responsibility CSR, and each company claims to follow this responsibility. In this paper we are going to carefully study how this idea is working in India and to what extent companies are following it for social and money-based growth of the country. It will try to decide and figure out the importance of CSR; the activities big business performs under CSR, its hits, effects and coming-together.
{"title":"An Analysis of Corporate Social Responsibility in India","authors":"Dr. Neeraj Kumar Sharma","doi":"10.2139/ssrn.3676827","DOIUrl":"https://doi.org/10.2139/ssrn.3676827","url":null,"abstract":"India is a developing nation where business firms related to telecom area, basic equipment etc., needed for a business or society to operate is at a developing stage. But after when lots of countries communicate and talk with each other which happened in the year 1991, when was opened up to the world and the international companies were allowed to do business in the country and invest in different parts and areas, the situation of industrial development has seen a sea-change. When Huge Companies are allowed by the government, there is bound to be extreme increase in the competition in domestic market. Each company tries its level best to prove itself in the market. They work for profit and profit becomes the very basic need for the organizations which are working in the country. But with the change in time and increase in the level of reading and writing ability rate, people who use a product or service become more and more aware and understand different things happening around them. With these changes another new idea comes out and became visible in the market which is called corporate social responsibility CSR, and each company claims to follow this responsibility. In this paper we are going to carefully study how this idea is working in India and to what extent companies are following it for social and money-based growth of the country. It will try to decide and figure out the importance of CSR; the activities big business performs under CSR, its hits, effects and coming-together.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123661763","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study compensation contracts of individual portfolio managers using hand‐collected data of over 4,500 U.S. mutual funds. Variations in the compensation structures are broadly consistent with an optimal contracting equilibrium. The likelihood of explicit performance‐based incentives is positively correlated with the intensity of agency conflicts, as proxied by the advisor's clientele dispersion, its affiliations in the financial industry, and its ownership structure. Investor sophistication and the threat of dismissal in outsourced funds serve as substitutes for explicit performance‐based incentives. Finally, we find little evidence of differences in future performance associated with any particular compensation arrangement.
{"title":"Portfolio Manager Compensation in the U.S. Mutual Fund Industry","authors":"Linlin Ma, Yuehua Tang, J. Gómez","doi":"10.2139/ssrn.2024027","DOIUrl":"https://doi.org/10.2139/ssrn.2024027","url":null,"abstract":"We study compensation contracts of individual portfolio managers using hand‐collected data of over 4,500 U.S. mutual funds. Variations in the compensation structures are broadly consistent with an optimal contracting equilibrium. The likelihood of explicit performance‐based incentives is positively correlated with the intensity of agency conflicts, as proxied by the advisor's clientele dispersion, its affiliations in the financial industry, and its ownership structure. Investor sophistication and the threat of dismissal in outsourced funds serve as substitutes for explicit performance‐based incentives. Finally, we find little evidence of differences in future performance associated with any particular compensation arrangement.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127425759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the effects of political connections and local corruption on the structures of firms’ bank pools. Using a manually collected data set of 389 listed Vietnamese companies in 2013, it finds that politically connected firms tend to establish their main bank relationships with connected banks. It also finds that connected firms reduce their numbers of banks and their diversity of bank ownership types in their bank pools when they achieve main bank relationships with connected banks; such firms maintain these bank pool structures when corruption is prevalent in their home provinces. Results demonstrate that local corruption is associated positively with number of banks and diversification of bank ownership types.
{"title":"Political Connections, Local Corruption, and Firm's Bank Pool Structures: Empirical Evidence from Vietnam","authors":"Vu Thi Hong Van","doi":"10.2139/ssrn.3160343","DOIUrl":"https://doi.org/10.2139/ssrn.3160343","url":null,"abstract":"This paper investigates the effects of political connections and local corruption on the structures of firms’ bank pools. Using a manually collected data set of 389 listed Vietnamese companies in 2013, it finds that politically connected firms tend to establish their main bank relationships with connected banks. It also finds that connected firms reduce their numbers of banks and their diversity of bank ownership types in their bank pools when they achieve main bank relationships with connected banks; such firms maintain these bank pool structures when corruption is prevalent in their home provinces. Results demonstrate that local corruption is associated positively with number of banks and diversification of bank ownership types.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"933 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124028956","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This essay considers the ramifications of the Delaware Supreme Court’s December 2017 Dell appraisal decision within the context of Delaware’s more sweeping clampdown on shareholder litigation protections in recent years, beginning with Corwin in 2015. While the Delaware Supreme Court rejected the “judicial gloss” of a formalized deal price rule in Dell, the gloss has, for all intents and purposes, been applied. The appraisal remedy had already been enfeebled in recent years by a slew of at-or-below deal price rulings, but Dell’s promulgation of a de facto procedural safe harbor marks a more systematic curtailment. The efficacy, as well as the public policy coherency, of Dell is tied to the notion that procedural “best practices” lead to, or are reflective of, fair dealing. Unfortunately, this is often not the case because the actors who are most likely to be conflicted are also the ones most likely to be in control the narrative presented in public-facing materials, particularly amid a broader boardroom shift—the “lone-insider” effect—which has undermined the monitoring capabilities of independent directors. In addition to lower deal premia and higher agency costs, the primary effects of Delaware’s post-2015 effort to dull shareholder defenses, culminating in Dell, will likely be: 1) faster CEO pay growth, and 2) more M&A and higher industry-specific measures of concentration, which research has shown to contribute to declining competition, lower levels of labor market mobility, wage stagnation, and increasing inequality in the United States.
{"title":"From Corwin to Dell: The Cost of Delaware Turning a Blind Eye","authors":"Matthew Schoenfeld","doi":"10.2139/SSRN.3122511","DOIUrl":"https://doi.org/10.2139/SSRN.3122511","url":null,"abstract":"This essay considers the ramifications of the Delaware Supreme Court’s December 2017 Dell appraisal decision within the context of Delaware’s more sweeping clampdown on shareholder litigation protections in recent years, beginning with Corwin in 2015. \u0000While the Delaware Supreme Court rejected the “judicial gloss” of a formalized deal price rule in Dell, the gloss has, for all intents and purposes, been applied. The appraisal remedy had already been enfeebled in recent years by a slew of at-or-below deal price rulings, but Dell’s promulgation of a de facto procedural safe harbor marks a more systematic curtailment. \u0000The efficacy, as well as the public policy coherency, of Dell is tied to the notion that procedural “best practices” lead to, or are reflective of, fair dealing. Unfortunately, this is often not the case because the actors who are most likely to be conflicted are also the ones most likely to be in control the narrative presented in public-facing materials, particularly amid a broader boardroom shift—the “lone-insider” effect—which has undermined the monitoring capabilities of independent directors. \u0000In addition to lower deal premia and higher agency costs, the primary effects of Delaware’s post-2015 effort to dull shareholder defenses, culminating in Dell, will likely be: 1) faster CEO pay growth, and 2) more M&A and higher industry-specific measures of concentration, which research has shown to contribute to declining competition, lower levels of labor market mobility, wage stagnation, and increasing inequality in the United States.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114979970","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the common and growing misuse of Tobin’s q as a proxy for firm value within the law and finance literatures. We trace the history of Tobin’s q, beginning with its original role as a mean-reverting construct that macroeconomists used to model investment policy. We document how the original version of q morphed into the simplified market-to-book ratio version that law and finance scholars regularly use today to examine regulatory policy, corporate governance, and other economic phenomena. Whereas macroeconomists rejected this simplistic version of q because of measurement error problems, law and finance scholars embraced it as a proxy for firm value. In addition, we demonstrate empirically why the simplistic version of q is so problematic. Many of the problems arise because regressions that have as their dependent variable a ratio with book value in the denominator are likely to produce biased estimates, due to both omitted assets and time-varying, firm-specific characteristics that can systematically alter a firm’s book value. As a result, the simplistic version of q produces non-classical measurement error in regression specifications that seek to estimate the relationship between firm value and various corporate and regulatory phenomena. We also confirm, consistent with macroeconomists’ view of the original Tobin’s q, that the market-to-book estimate of q is mean-reverting in terms of stockholder returns. Finally, we suggest a new approach. We replicate the details of one leading study that was based on the simplistic version of q and then show how its results differ when we employ several alternative approaches. We propose that scholars should use these alternative approaches, including direct estimates of firm value instead of the simplistic market-to-book ratio, and, when possible, should supplement the popular fixed effects estimator with the first difference estimator. Overall, our message is straightforward: scholars should view with suspicion any assertions about corporate governance and regulation that are based on the use of market-to-book ratios as the dependent variable in regressions.
{"title":"The Misuse of Tobin's Q","authors":"Robert P. Bartlett, Frank Partnoy","doi":"10.2139/ssrn.3118020","DOIUrl":"https://doi.org/10.2139/ssrn.3118020","url":null,"abstract":"We examine the common and growing misuse of Tobin’s q as a proxy for firm value within the law and finance literatures. We trace the history of Tobin’s q, beginning with its original role as a mean-reverting construct that macroeconomists used to model investment policy. We document how the original version of q morphed into the simplified market-to-book ratio version that law and finance scholars regularly use today to examine regulatory policy, corporate governance, and other economic phenomena. Whereas macroeconomists rejected this simplistic version of q because of measurement error problems, law and finance scholars embraced it as a proxy for firm value. \u0000In addition, we demonstrate empirically why the simplistic version of q is so problematic. Many of the problems arise because regressions that have as their dependent variable a ratio with book value in the denominator are likely to produce biased estimates, due to both omitted assets and time-varying, firm-specific characteristics that can systematically alter a firm’s book value. As a result, the simplistic version of q produces non-classical measurement error in regression specifications that seek to estimate the relationship between firm value and various corporate and regulatory phenomena. We also confirm, consistent with macroeconomists’ view of the original Tobin’s q, that the market-to-book estimate of q is mean-reverting in terms of stockholder returns. \u0000Finally, we suggest a new approach. We replicate the details of one leading study that was based on the simplistic version of q and then show how its results differ when we employ several alternative approaches. We propose that scholars should use these alternative approaches, including direct estimates of firm value instead of the simplistic market-to-book ratio, and, when possible, should supplement the popular fixed effects estimator with the first difference estimator. Overall, our message is straightforward: scholars should view with suspicion any assertions about corporate governance and regulation that are based on the use of market-to-book ratios as the dependent variable in regressions.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"90 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134070205","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the association between board diversity, measured in both relation-oriented dimension (i.e., gender, race, and age) and task-oriented dimension (i.e., tenure and expertise), and board performance in corporate investment monitoring. We assess sub-optimal investment by measuring how much firms deviate from the expected level of capital expenditures, R&D expenses, and acquisition spending within their industry. Using a sample of 15,125 firm-year across 1,898 firms from 1998 to 2014, we find that task-oriented diversity attributes, such as tenure and expertise, are negatively associated with sub-optimal investment, suggesting that diverse boards in terms of firm specific experience and functional expertise are more effective in overseeing corporate investment activities than homogeneous boards. Our results shed light on the recent regulatory requirements on board diversity and recommend greater task-oriented diversity in corporate boardrooms.
{"title":"Board Diversity and Corporate Investment Monitoring","authors":"M. Harjoto, I. Laksmana, Ya‐wen Yang","doi":"10.2139/ssrn.3174065","DOIUrl":"https://doi.org/10.2139/ssrn.3174065","url":null,"abstract":"This study examines the association between board diversity, measured in both relation-oriented dimension (i.e., gender, race, and age) and task-oriented dimension (i.e., tenure and expertise), and board performance in corporate investment monitoring. We assess sub-optimal investment by measuring how much firms deviate from the expected level of capital expenditures, R&D expenses, and acquisition spending within their industry. Using a sample of 15,125 firm-year across 1,898 firms from 1998 to 2014, we find that task-oriented diversity attributes, such as tenure and expertise, are negatively associated with sub-optimal investment, suggesting that diverse boards in terms of firm specific experience and functional expertise are more effective in overseeing corporate investment activities than homogeneous boards. Our results shed light on the recent regulatory requirements on board diversity and recommend greater task-oriented diversity in corporate boardrooms.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131018005","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Korean Abstract: 2011년 발생한 저축은행 사태의 주요한 원인 중의 하나로 최대주주의 전횡적인 부실경영을 가능하게 한 소유구조의 문제점이 제기되었다. 본고에서는 당시 파산한 30개 부실저축은행들의 소유구조 현황을 살펴보고, 지배주주와 대표이사의 겸직 여부, 지분율 정도 등 소유지배구조가 저축은행 부실가능성과 어떠한 관계가 있는지 분석하였다. 분석결과 최대주주 지분율이 낮은 수준에서 높아질수록 저축은행의 부실가능성이 하락하다가 지분율이 일정 수준이상을 넘어서면 부실가능성이 높아지는 U자형 비선형관계를 가지는 것으로 나타났다. 또한 최대주주가 대표이사로서 직접 경영에 참여할 경우 최대주주 지분율과 부실의 정( )의 관계는 더욱 강하게 나타났다. 이러한 분석결과는 향후 저축은행 부실가능성을 낮추기 위해서는 최대주주의 지분율에 적정한도를 설정하고, 연기금이나 공제회 등 공적인 투자기관의 저축은행 지분참여확대를 통해 견제시스템을 강화해야 한다는 정책적 시사점을 제시한다.
English Abstract: Problems with ownership structure that allowed the largest shareholders to make decisions that decrease firm value are pointed out as one of main causes of the massive failures of savings banks in 2011. In this paper, we examine 30 failed savings banks to explore the determinants of the failures by analyzing the impact of ownership structure and the role of the outside directors. We find that the higher the ownership by the largest shareholders, the lower the likelihood of failure of the savings bank up to a certain level. And at one point, the likelihood of savings bank failure increases as the ownership level of the largest shareholders become concentrated. Thus, we confirm a U-shaped nonlinear relationship between the probability of bank failure and the ownership structure by largest shareholders. We further show that if the largest shareholder participates in direct management as a representative director, the probability of failure increases. Our results suggest important policy implications that an governance system can be strengthened through the shareholder activism of large institutional investors such as pension and trust funds.
Korean Abstract: 2011年发生储蓄银行事件的主要原因之一，提出了导致最大股东专横经营不善的所有结构问题。本库查看了当时破产的30家亏损储蓄银行的所有结构现状，并分析了控股股东和代表理事是否兼职、持股率程度等所有支配结构与储蓄银行亏损的可能性有什么关系。分析结果显示，最大股东的持股率越低，储蓄银行的亏损可能性就越低，如果持股率超过一定水平，亏损可能性就越高，呈现出U型非线性关系。另外，最大股东作为代表理事直接参与经营时，最大股东的持股率和亏损程度的关系更加明显。这样的分析结果,未来储蓄银行为了降低不良可能性最大股东的持股率设定合理的限度,基金或共济会等通过扩大公共投资机构的储蓄银行入股应加强견제시스템提出政策性的启发点。english abstract:Problems with ownership structure that allowed the largest shareholders to make decisions that decrease firm value are pointed out as one of main causes of the massive failures of savings banks in2011. In this paper, we examine 30 failed savings banks to explore the determinants of the failures by analyzing the impact of ownership structure and the role of the outside directors。We find that the higher the ownership by the largest shareholders, the lower the likelihood of failure of the savings bank up to a certain level。the likelihood of savings bank failure increases as the ownership level of the largest shareholders become concentrated。Thus, we confirm a U-shaped nonlinear relationship between the probability of bank failure and the ownership structure by largest shareholders。We further show that if the largest shareholder participates in direct management as a representative director, the probability of failure increases。Our results suggest important policy implications that an governance system can be strengthened through the shareholder activism of large institutional investors such as pension and trust funds。
{"title":"저축은행의 소유구조와 부실위험에 관한 연구 (A Study on the Ownership Structure and Insolvencies of Savings Bank)","authors":"Hakkon Kim, Kwangwoo Park, Seungkon Oh","doi":"10.2139/ssrn.3185996","DOIUrl":"https://doi.org/10.2139/ssrn.3185996","url":null,"abstract":"<b>Korean Abstract:</b> 2011년 발생한 저축은행 사태의 주요한 원인 중의 하나로 최대주주의 전횡적인 부실경영을 가능하게 한 소유구조의 문제점이 제기되었다. 본고에서는 당시 파산한 30개 부실저축은행들의 소유구조 현황을 살펴보고, 지배주주와 대표이사의 겸직 여부, 지분율 정도 등 소유지배구조가 저축은행 부실가능성과 어떠한 관계가 있는지 분석하였다. 분석결과 최대주주 지분율이 낮은 수준에서 높아질수록 저축은행의 부실가능성이 하락하다가 지분율이 일정 수준이상을 넘어서면 부실가능성이 높아지는 U자형 비선형관계를 가지는 것으로 나타났다. 또한 최대주주가 대표이사로서 직접 경영에 참여할 경우 최대주주 지분율과 부실의 정( )의 관계는 더욱 강하게 나타났다. 이러한 분석결과는 향후 저축은행 부실가능성을 낮추기 위해서는 최대주주의 지분율에 적정한도를 설정하고, 연기금이나 공제회 등 공적인 투자기관의 저축은행 지분참여확대를 통해 견제시스템을 강화해야 한다는 정책적 시사점을 제시한다.<br><br><b>English Abstract:</b> Problems with ownership structure that allowed the largest shareholders to make decisions that decrease firm value are pointed out as one of main causes of the massive failures of savings banks in 2011. In this paper, we examine 30 failed savings banks to explore the determinants of the failures by analyzing the impact of ownership structure and the role of the outside directors. We find that the higher the ownership by the largest shareholders, the lower the likelihood of failure of the savings bank up to a certain level. And at one point, the likelihood of savings bank failure increases as the ownership level of the largest shareholders become concentrated. Thus, we confirm a U-shaped nonlinear relationship between the probability of bank failure and the ownership structure by largest shareholders. We further show that if the largest shareholder participates in direct management as a representative director, the probability of failure increases. Our results suggest important policy implications that an governance system can be strengthened through the shareholder activism of large institutional investors such as pension and trust funds.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"160 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-12-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128998846","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In her recent book Private Government, Elizabeth Anderson makes a powerful but pragmatic case against the abuses experienced by employees in conventional corporations. The purpose of this review-essay is to contrast Anderson’s pragmatic critique of many abuses in the employment relation with a principled critique of the employment relationship itself. This principled critique is based on the theory of inalienable rights that descends from the Reformation doctrine of the inalienability of conscience down through the Enlightenment in the abolitionist, democratic, and feminist movements. That theory was the basis for the abolition of the voluntary slavery or self-sale contract, the voluntary non-democratic constitution (pactum subjectionis), and the voluntary coverture marriage contract in today’s democratic countries. When understood in modern terms, that same theory applies as well against the voluntary self-rental or employment contract that is the basis for our current economic system.
{"title":"Rethinking Libertarianism: A Review Essay on Elizabeth Anderson’s ‘Private Government’","authors":"D. Ellerman","doi":"10.2139/SSRN.3077038","DOIUrl":"https://doi.org/10.2139/SSRN.3077038","url":null,"abstract":"In her recent book Private Government, Elizabeth Anderson makes a powerful but pragmatic case against the abuses experienced by employees in conventional corporations. The purpose of this review-essay is to contrast Anderson’s pragmatic critique of many abuses in the employment relation with a principled critique of the employment relationship itself. This principled critique is based on the theory of inalienable rights that descends from the Reformation doctrine of the inalienability of conscience down through the Enlightenment in the abolitionist, democratic, and feminist movements. That theory was the basis for the abolition of the voluntary slavery or self-sale contract, the voluntary non-democratic constitution (pactum subjectionis), and the voluntary coverture marriage contract in today’s democratic countries. When understood in modern terms, that same theory applies as well against the voluntary self-rental or employment contract that is the basis for our current economic system.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122348401","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nicole M. Boyson, Nickolay Gantchev, Anil Shivdasani
Shareholder value creation from hedge fund activism occurs primarily by influencing takeover outcomes for targeted firms. Controlling for selection decisions, activist interventions substantially increase the probability of a takeover offer. Third-party bids for targets have higher returns, premia, and completion rates, but these patterns reverse when the activist is the bidder. Failed bids for activism targets lead to improvements in operating performance, financial policy, and positive long-term abnormal returns, suggesting that activism enhances value. The positive long-term performance from hedge fund activism arises from monitoring target management during merger and acquisition contests and not from target undervaluation or bidder overpayment.
{"title":"Activism Mergers","authors":"Nicole M. Boyson, Nickolay Gantchev, Anil Shivdasani","doi":"10.2139/ssrn.2677416","DOIUrl":"https://doi.org/10.2139/ssrn.2677416","url":null,"abstract":"Shareholder value creation from hedge fund activism occurs primarily by influencing takeover outcomes for targeted firms. Controlling for selection decisions, activist interventions substantially increase the probability of a takeover offer. Third-party bids for targets have higher returns, premia, and completion rates, but these patterns reverse when the activist is the bidder. Failed bids for activism targets lead to improvements in operating performance, financial policy, and positive long-term abnormal returns, suggesting that activism enhances value. The positive long-term performance from hedge fund activism arises from monitoring target management during merger and acquisition contests and not from target undervaluation or bidder overpayment.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"10 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130441915","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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