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We study the problem of a firm that is controlled by a large shareholder and is going public in the presence of agency problems, asymmetric information, and trading of shares over time. In this multiperiod signalling game, a shareholder-manager can develop a reputation for expropriating low...
Persistent link: https://www.econbiz.de/10005245249
The threat of takeover acts to discipline managers, but it also makes shareholders' assurances to managers less reliable and so interferes with contrcting between them. These two effects have opposing implications about the level of executive compensation: the disciplinary effect implies a...
Persistent link: https://www.econbiz.de/10005245252
Using a database of branch managers in retail banks, this study finds some empirical support for the two main predictions of Jensen and Meckling's (1992) theory on organizational design choices: a) the allocation of decision rights to branch managers is associated with control systems that...
Persistent link: https://www.econbiz.de/10005245304
This paper examines the use of seven mechanisms to control agency problems between managers and shareholders. These mechanisms are: shareholdings of insiders, institutions, and large blockholders; use of outside directors; debt policy; the managerial labor market; and the market for corporate...
Persistent link: https://www.econbiz.de/10005245305
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...
Persistent link: https://www.econbiz.de/10005245339
In recent years, the number of downgrades in corporate bond ratings has exceeded the number of upgrades, leading some to conclude that the credit quality of U.S. corporate debt has declined. However, an alternative explanation of this apparent decline in credit quality is that the rating...
Persistent link: https://www.econbiz.de/10005207444
Costs of equity for individual firms are estimated in a Bayesian framework using several factor-based pricing models.
Persistent link: https://www.econbiz.de/10005618224