Financial economists seem to believe that takeovers are partly motivated by the desire to improve poorly-performing firms. However, prior empirical evidence in support of this inefficient management hypothesis is rather weak. We provide a detailed reexamination of this hypothesis in a...

While the bulk of the research on the financial performance of mergers and acquisitions has focused on stock returns around the merger announcement, a surprisingly large set of papers has also examined long-run stock returns following acquisitions. We review this literature, concluding that...

Anecdotal evidence suggests that top managers of firms that are investigated for fraud lose their jobs. Fraud scandals plausibly create incentives to change managers, in an attempt to improve the firm's performance, recover lost reputational capital, or limit the firm's exposure to liabilities...

It is often stated that bidders acquire poorly-run targets in order to improve firm performance. This inefficient management hypothesis is frequently tested by examining target stock returns in the years prior to an acquisition. While the hypothesis is commonly assumed in the literature to be...

This paper empirically examines whether the short swing rule (Section 16b of the Securities Exchange Act) deters managers from trading before merger announcements. This rule bars insiders from profiting on round-trip trades within a six month period. It is unlikely to deter insiders from trading...

Financial economists seem to believe that takeovers are partly motivated by the desire to improve poorly-performing firms. However, prior empirical evidence in support of this inefficient management hypothesis is rather weak. We provide a detailed reexamination of this hypothesis in a...

While the bulk of the research on the financial performance of mergers and acquisitions has focused on stock returns around the merger announcement, a surprisingly large set of papers has also examined long-run stock returns following acquisitions. We review this literature, concluding that...