Takeover defenses are generally viewed as a tool used by entrenched managers to prevent raiders from taking over the firm. As a consequence, activist groups interested in governance reform have recently been arguing for the elimination of such defenses. In this paper we analyze the value impact...

This paper develops an agency model in which stock-based compensation is a double-edged sword, inducing managers to exert productive effort but also inducing managers to divert valuable firm resources to misrepresent performance. We examine how the potential for manipulation affects the...

Firms targeted by Securities and Exchange Commission enforcement actions for fraudulent financial misrepresentation, on average, experience a significant drop in shareholder value. This paper highlights the additional impact of such enforcement actions on the shareholders of rival firms....

In this paper, we demonstrate that the performance of actively-managed equity portfolios varies cross sectionally with several portfolio scope characteristics. In particular, we show that performance (as measured by Jensen's alpha) increases when a larger fraction of the portfolio is...

In this paper we offer an explanation for the empirical anomaly that most raiders do not acquire the maximum possible toehold prior to announcing a takeover bid. By endogenously modeling the target value following an unsuccessful takeover we demonstrate that a raider may optimally choose to...

When a firm forms a market closes. Resources that were previously allocated via the price system are allocated by managerial authority within the firm. We explore this choice of organizational form using a model of price formation in which agents negotiate prices on behalf of their principals...

In a multidivision firm, does the market collect less value-relevant information when the divisions are treated as a unit rather than when each division trades as a separate firm? We find that organizational form has a nontrivial impact on information collection. In particular, we find that a...

We offer an explanation for why raiders do not acquire the maximum possible toehold prior to announcing a takeover bid. By endogenously modeling the target firm's value following an unsuccessful takeover we demonstrate that a raider may optimally acquire a small toehold even if the acquisition...

In this paper we analyze the resource allocation decision of a manager of a multi division firm whose compensation is based on the firms stock price. We find that internal investments exhibit a positive correlation across the firms divisions. In particular, when two divisions are put into one...

This paper examines how information becomes reflected in prices when investment decisions are delegated to fund managers whose tenure may be shorter than the time it takes for their private information to become public. We consider a sequence of managers, where each subsequent manager inherits...