search query: @freeterm takeovers / total: 11
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| Author: | Giroud, X. Mueller, H.M. |
| Title: | Does corporate governance matter in competitive industries? |
| Journal: | Journal of Financial Economics
2010 : MAR, VOL. 95:3, p. 312-331 |
| Index terms: | USA companies corporate governance industries products markets competition legislation |
| Freeterms: | takeovers |
| Language: | eng |
| Abstract: | Business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack by reducing the threat of a hostile takeover. It is found that while firms in non-competitive (hereafter as: n-c.) industries (as: inds.) experience a significant drop in operating performance after the laws' passage, firms in competitive (as: comp.) inds. encounter no significant effect. When exploring which agency problem competition mitigates, there is found evidence in support of a "quiet-life" hypothesis. Input costs, wages, and overhead costs all increase after the laws' passage, and do only so in n-c. inds. Similarly, when preforming event studies around the dates of the first newspaper reports about the BC laws, it is found that while firms in n-c. industries undergo a significant stock price decline, firms in comp. inds. experience a small and insignificant stock price impact. |
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