Agency problems are an important determinant of corporate liquidity. For a sample of more than 11,000 firms from 45 countries, we find that corporations in countries where shareholders rights are not well protected hold up to twice as much cash as corporations in countries with good shareholder...

Does shareholder value orientation lead to shareholder value creation? This article proposes methods to quantify both, shareholder value orientation and shareholder value creation. Through the application of these models it is possible to quantify both dimensions and examine statistically in how...

Business groups in emerging markets perform better than unaffiliated firms. One explanation is that business groups perform some functions of missing institutions, for example, enforcing contracts. We investigate this by setting up a model where firms within the business group are connected to...

Governments and vocal institutional shareholders have been exerting pressure on companies they deem to have objectionable operations (such as tobacco or chemical producers). This paper studies the effect of the most important legislative and shareholder boycott to date, the boycott of the South...

This paper examines the impact of managerial entrenchment on corporate financing decisions. We build a dynamic contingent claims model in which financing policy results from a trade-off between tax benefits, agency conflicts, and contracting frictions. In our setting, managers do not act in the...

Equity ties between businesses change the division of the firms’ joint profits, thereby affecting incentives for relation-specific investments and other strategic actions. Depending on which side owns the equity and how readily the equity can be resold, we find that the changed incentives can...

We examine deal-level data on private equity transactions in the UK initiated during the period 1996 to 2004 by mature private equity houses. We un-lever the deal-level equity return and adjust for (un-levered) return to quoted peers to extract a measure of "alpha" or abnormal performance of the...

We develop a model of internal governance where the self-serving actions of top management are limited by the potential reaction of subordinates. We find that internal governance can mitigate agency problems and ensure firms have substantial value, even without any external governance. Internal...

(VF)Cet article analyse la restructuration de l'industrie européenne aérospatiale et de défense via la création d’EADS, société possédant 80 % d'Airbus. Lancé par une impulsion politique des gouvernements européens, ce processus a abouti à la création d’un acteur industriel de...

Business groups in emerging markets perform better than unaffiliated firms. One explanation is that business groups substitute some functions of missing institutions, for example, enforcing contracts. We investigate this by setting up a model where firms within the business group are connected...