Board share-ownership and takeover performance

Journal of Business Finance and Accounting

Volumn 33, Issue 3-4, 2006, Pages 459-510

  Cosh, Andy ^a   Guest, Paul M ^a,b   Hughes, Alan ^a  

^a UNIVERSITY OF CAMBRIDGE   (United Kingdom)

^b UNIVERSITY OF CAMBRIDGE   (United Kingdom)

Author keywords

Board ownership; CEO ownership; Endogeneity; Long run share returns; Operating performance; Takeovers

Indexed keywords

EID: 33646855988     PISSN: 0306686X     EISSN: 14685957     Source Type: Journal    
DOI: 10.1111/j.1468-5957.2006.00615.x     Document Type: Review

References (100)

1. Agrawal, A. and J.M. Jaffe (2000), 'The Post-merger Performance Puzzle', in G. Cooper and A. Gregory (eds.), Advances in Mergers and Acquisitions (Amsterdam: Elsevier Science).
2. Allen, M.P. (1981), 'Managerial Power and Tenure in the Large Corporation', Social Forces, Vol. 60, pp. 482-94.
3. Amihud, Y. and B. Lev (1981), 'Risk Reduction as a Managerial Motive for Conglomerate Mergers', Bell Journal of Economics, Vol. 12, pp. 605-17.
4. Ang, J.S. and Y. Cheng (2006), 'Direct Evidence on the Market-driven Acquisitions Theory', Journal of Financial Research (forthcoming).
5. Barber, B. and D. Lyon (1996), 'Detecting Abnormal Operating Performance: The Empirical Power and Specification of Test Statistics", Journal of Financial Economics, Vol. 41, pp. 359-99.
6. _ _ (1997), 'Detecting Long Run Abnormal Stock Returns: The Empirical Power and Specification of Test Statistics", Journal of Financial Economics, Vol. 43, pp. 341-72.
7. Baysinger, B. and R.E. Hoskisson (1990), "The Composition of Boards of Directors and Strategic Control: Effects on Corporate Strategy', Academy of Management Review, Vol. 15, pp. 72-87.
8. Berle, A.A. and G.C. Means (1932), The Modern Corporation and Private Property (New York; Macmillan).
9. Boudreaux, K.J. (1973), 'Managerialism and Risk-return Performance', Southern Economic Journal, Vol. 29, pp. 366-72.
10. Brown, S.J. and J.B. Warner (1985), 'Using Daily Stock Returns: The Case of Event Studies', Journal of Financial Economics, Vol. 14, pp. 3-31.
11. Bruner, R.F. (2003), 'Does M&A Pay? A Survey of Evidence for the Decision-Maker', Journal of Applied Finance, Vol. 12, pp. 48-69.
12. Chatterjee, R. and G. Meeks (1996), 'The Financial Effects of Takeover: Accounting Rates of Return and Accounting Regulation', Journal of Business Finance & Accounting, Vol. 23, pp. 851-68.
13. Cho, M. (1998), 'Ownership Structure, Investment, and the Corporate Value: An Empirical Analysis', Journal of Financial Economics, Vol. 47, pp. 103-21.
14. Conn, R.L. (1980), 'Merger Pricing Policy by Owner-controlled versus Manager-controlled Firms', Journal of Industrial Economies, Vol. XXVIII, pp. 427-38.
15. _, A. Cosh, P.M. Guest and A. Hughes (2004), 'Why Must All Good Things Come to an End? The Performance of Multiple Acquirers', in D.H. Nagao (ed.), Proceedings of the Sixty-third Annual Meeting of the Academy of Management.
16. _ _ _ _ (2005), 'The Impact on UK Acquirers of Domestic, Crossborder, Public and Private Acquisitions', Journal of Business Finance & Accounting, Vol. 32, pp. 815-70.
17. Cosh, A., and A. Hughes (1987), 'The Anatomy of Corporate Control: Directors, Shareholders and Executive Remuneration in Giant US and UK Corporations', Cambridge Journal of Economics, Vol. 11, pp. 285-313.
18. _ _ (1997), 'The Changing Anatomy of Corporate Control and the Market for Executives in the United Kingdom', Journal of IMW and Society, Vol. 24, pp. 104-23.
19. _ _, K. Lee and A. Singh (1989), 'Institutional Investment, Mergers and the Market for Corporate Control', International Journal of Industrial Economics, pp. 73-100.
20. _ _ _ _ (1998), 'Takeovers, institutional Investment and the Persistence of Profits', in I. Begg and S. Henry (eds.), Applied Economics and Public Policy (Cambridge University Press).
21. Cubbin, J. and D. Leech (1986), 'Growth versus Profit-Maximisation: A Simultaneous Equation Approach to Testing the Marris Model', Managerial and Decision Economics Vol. 7, pp. 123-31.
22. Deakin, S. and A. Hughes (1997), 'Comparative Corporate Governance: An Interdisciplinary Research Agenda', Journal of Law and Society, Vol. 24, No. 1 (March), pp. 1-9.
23. Demsetz, H. and K. Lehn (1985), 'The Structure of Corporate Ownership: Causes and Consequences', Journal of Political Economy, Vol. 93, pp. 1155-77.
24. Dennis, D.J. and D. Dennis (1993), 'Managerial Discretion, Organisation Structure and Corporate Performance', Journal of Accounting and Economics, Vol. 16, pp. 209-36.
25. Dong, M., D. Hirshleifer, S. Richardson and S.H. Teoh (2006), 'Does Investor Misvaluation Drive the Takeover Market?', Journal of Finance (forthcoming).
26. Elliott, J.W. (1972), 'Control, Size, Growth, and Financial Performance in the Firm', Journal of Finance and Quantitative Analysis, Vol. 7, pp. 1309-20.
27. Faccio, M. and M. Lasfer (1999), 'Managerial Ownership, Board Structure and Firm Value: The UK Evidence', City University Working Paper.
28. Fama, E.F. (1980), 'Agency Problems and the Theory of the Firm', Journal of Political Economy, Vol. 88, pp. 288-307.
29. _ and M. Jensen (1983), 'Separation of Ownership and Control', Journal of Law and Economics, Vol. 26, pp. 301-25.
30. Firth, M. (1980), Takeovers, Shareholder Returns and the Theory of the Firm', Quarterly Journal of Economics, pp. 235-60.
31. Ghosh, A. (2001), 'Does Operating Performances Really Improve Following Corporate Acquisitions?', Journal of Corporate Finance, Vol. 7, pp. 151-78.
32. Ghosh, A. and W. Ruland (1998), 'Managerial Ownership, the Method of Payment for Acquisitions and Executive Job Retention', Journal of Finance, Vol. LIII, pp. 785-98.
33. Gregory, A. (1997), 'An Examination of the Long Run Performance of UK Acquiring Firms', Journal of Business Finance & Accounting, Vol. 24, pp. 971-1002.
34. Griffith, J.M. (1999), 'CEO Ownership and Firm Value', Managerial and Decision Economics, Vol.'20, pp. 1-8.
35. Gugler, K., D.C. Mueller and B. Yurtoglu (2004), 'Corporate Governance and the Returns on Investment', Journal of Law Economics, Vol. 47, pp. 589-633.
36. Hayward, M.L.A. and D.C. Hambrick (1997), 'Explaining the Premiums Paid for Large Acquisitions: Evidence of CEO Hubris', Administrative Science Quarterly, Vol. 42, pp. 103-27.
37. Healy, P., K. Palepu and R. Ruback (1992), 'Does Corporate Performance Improve After Mergers?', Journal of Financial Economics, Vol. 31, pp. 135-75.
38. Hermalin, B. and M. Weisbach (1993), 'The Effects of Board Composition and Direct Incentives on Firm Performance', Financial Management, pp. 101-12.
39. Herman, E.S. (1981), Corporate Control, Corporate Power (New York: William Morrow).
40. Higson, C. (1998), 'Goodwill', British Accounting Review, Vol. 30, pp. 141-58.
41. Himmelberg, C., G. Hubbard and D. Palia (1999), 'Understanding the Determinants of Managerial Ownership and the Link between Ownership and Performance', Journal of Financial Economics, Vol. 53, pp. 353-84.
42. Hindley, B. (1970), 'Separation of Ownership and Control in the Modern Corporation', Journal of Law and Economics, Vol. 13, pp. 195-222.
43. Hirschman, A. (1970), Exit, Voice and Loyalty (Boston: Harvard University Press).
44. Holl, P. (1975), 'Effect of Control Type on the Performance of the Firms in the U.K', Journal of Industrial Economics, Vol. 23, pp. 257-71.
45. Hubbard, R. and D. Palia (1995), 'Benefits of Control, Managerial Ownership, and the Stock Returns of Acquiring Firms', Rand Journal of Economics, Vol. 26, pp. 782-92.
46. Hughes, A. (1993), 'Mergers and Economic Performance in the UK: A Survey of the Empirical Evidence 1950-90', in M. Bishop and J. Kay (eds.), European Mergers and Merger Policy (Oxford: Oxford University Press).
47. James, D.R. and M. Soref (1981), 'Managerial Theory: Unmasking of the Corporation President', American Sociological Review, Vol. 46, pp. 1-18.
48. Jensen, M. arid R. Ruback (1983), 'The Market for Corporate Control: The Scientific Evidence', Journal of Financial Economics, pp. 5-50.
49. _ and W. Meckling (1976), 'Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure', Journal of Financial Economics, Vol. 3, pp. 305-60.
50. _ and E.J. Zajac (2004), 'Corporate Elites and Corporate Strategy: How Demographic Preferences arid Structural Position Shape the Scope of the Firm', Strategic Management Journal, Vol. 25, pp. 507-24.
51. Kamerschen, D.R. (1968), The Influence of Ownership and Control on Profit Rates', American Economic Review, Vol. 58, pp. 432-47.
52. Kania, J.J. and J.R. McKean (1976), 'Ownership, Control and the Contemporary Corporation: A General Behavioural Analysis', Kyklos, Vol. 29, pp. 272-91.
53. Kole, S.R. (1995), 'Measuring Managerial Equity Ownership: A Comparison of Sources of Ownership Data', Journal of Corporate Finance, Vol. 1, pp. 413-35.
54. _ (1996), 'Managerial Ownership and Firm Performance: Incentives or Rewards?', Advances in Financial Economics, Vol. 2, pp. 119-49.
55. Kosnik, R.D. (1987), 'Greenmail: A Study of Board Performance in Corporate Governance', Administrative Science Quarterly, Vol. 32, pp. 163-85.
56. _ (1990), 'Effects of Board Demography and Directors' Incentives on Corporate Greenmail Decisions', Academy of Management Journal, Vol. 33, pp. 129-50.
57. Lambert, R. and D. Larcker (1987), 'Executive Compensation Effects of Large Corporate Acquisitions', Journal of Accounting and Public Policy, Vol. 6, pp. 231-43.
58. La Porta, R., F. Lopez-del-Silanes, A. Shleifer and R. Vishny (2002), 'Investor Protection and Corporate Governance", Journal of Financial Economics, Vol. 58, pp. 3-27.
59. Larner, R.J. (1970), Management Control and the Large Corporation (New York: Dunellen).
60. Lewellen, W., C. Loderer and A. Rosenfeld (1985), 'Merger Decisions and Executive Stock Ownership in Acquiring Firms', Journal of Accounting and Economics, Vol. 7, pp. 209-31.
61. Loderer, G. and K. Martin (1998), 'Executive Stock Ownership and Performance: Tracking Faint Changes', Journal of Financial Economics, Vol. 45, pp. 223-55.
62. Loughran, T. and A. Vijh (1997), 'Do Long Term Shareholders Benefit from Corporate Acquisitions?', Journal of Finance, Vol. 5, pp. 1765-90.
63. Manson, S., A.W. Stark and H.M. Thomas (1994), A Cash Flow Analysis of the Operational Gains from. Take-overs, Certified Research Report 35 (London: Certified Accountants Education Trust).
64. _, R. Powell, A.W. Stark and H.M. Thomas (2000), 'Identifying the Sources of Gains from Takeovers', Accounting Forum, Vol. 24, pp. 319-43.
65. Marris, R.L. (1964), The Economic Means of Managerial Capitalism (London: Macmillan).
66. Martin, K.J. (1996), 'The Method of Payment, in Corporate Acquisitions, Investment Opportunities, and Management Ownership", Journal of Finance, pp. 1227-46.
67. McConnell, J. and C. Muscarella (1985), 'Corporate Capital Expenditure Decisions and the Market Value of the Firm', Journal of Financial. Economics, Vol. 14, pp. 399-422.
68. _ and H. Servaes (1991), 'Additional Evidence on Equity Ownership and Corporate Value', Journal of Financial Economics, Vol. 27, pp. 595-612.
69. _ _ (1995), 'Equity Ownership and the Two Faces of Debt', Journal of Financial Economics, Vol. 39, pp. 131-57.
70. McEachern, W.A. (1978), 'Corporate Control and Growth: An Alternative Approach', Journal of Industrial Economics, Vol. 26, pp. 257-66.
71. _ (1975), Managerial Control and Performance (Ma: Lexington).
72. Megginson, W.L., A. Morgan and L. Nail (2004), 'The Determinants of Positive Long-term Performance in Strategic Mergers: Corporate Focus and Cash', Journal of Banking and Finance, Vol. 28, pp. 523-52.
73. Monks, R.A.G. and N. Minow (2004), Corporate Governance (Oxford: Blackwell Publishing).
74. Monsen, R.J., J.S. Chiu and D.E. Cooley (1968), 'The Effects of Separation of Ownership and Control on the Performance of the Large Firm', Quarterly Journal of Economics, Vol. 82, pp. 435-51.
75. Morck, R., A. Shleifer and R. Vishny (1988), 'Management Ownership and Market Valuation: An Empirical Analysis', Journal of Financial Economics, Vol. 20, pp. 293-315.
76. _ _ _ (1990), 'Do Managerial Objectives Drive Bad Acquisitions', Journal of Finance, pp. 31-48.
77. Palmer, J. (1973), 'The Profit Performance Effects of the Separation of Ownership from Control in Larger US Industrial Corporations', Bell Journal of Economic and Management Science (Spring), pp. 293-303.
78. _ (1975), 'A Further Analysis of Profitability and Managerialism', Economic Training, Vol. 13, pp. 127-30.
79. Powell, R. and A. Stark (2005), 'Does Operating Performance Increase Post-takeover for UK Takeovers? A Comparison of Performance Measures and Benchmarks', Journal of Corporate Finance,Vol. 11, pp. 293-317.
80. Quails, D.P. (1976), 'Market Structure and Managerial Behaviour', in R.T. Masson and D.P. Quail's (eds.), Essays on Industrial Organisation in Honour of J.S. Bain (Cambridge, Mass: Ballinger).
81. Radice, H.K. (1971), 'Control Type, Profitability and Growth in Large Firms: An Empirical Study', Economic Journal, Vol. 81, pp. 547-62.
82. Rau, P. and T. Vermaelen (1998), 'Glamour, Value and the Post-acquisition Performance of Acquiring Firms', Journal of Financial Economics, Vol. 49, pp. 223-53.
83. Seyhun, H. (1990), 'Do Bidder Managers Knowingly Pay Too Much for Target Firms?', Journal of Business, Vol. 63, pp. 439-64.
84. Shinn, E. (1999), 'Returns to Acquiring Firms: The Role of Managerial Ownership, Managerial Wealth, and Outside Owners', Journal of Economics and Finance, Vol. 23, pp. 78-89.
85. Shleifer, A. and R. Vishny (2003), 'Stock Market Driven Acquisitions', Journal of Financial Economics, Vol. 70, pp. 295-311.
86. Short, H. and K. Keasey (1999), 'Managerial Ownership and the Performance of Firms: Evidence from the UK, Journal of Corporate Finance, Vol. 5, pp. 79-101.
87. Slutsky, A. and R. Caves (1991), 'Synergy, Agency, and the Determinants of Premia Paid in Mergers', Journal of Industrial Economics, Vol. 39, pp. 277-96.
88. Sorensen, R. (1974), 'The Separation of Ownership and Control and Firm Performance: An Empirical Analysis', Southern Economic Journal, Vol. 41, pp. 145-48.
89. Stano, M. (1975), 'Executive Ownership Interests and Corporate Performance', Southern Economic Journal, Vol. 42, pp. 272-78.
90. _ (1976), 'Monopoly Power, Ownership Control, and Corporate Performance', Bell Journal of Economics, Vol. 7, pp. 672-79.
91. Sudarsanam, S. and A.A. Mahate (2003), 'Glamour Acquirers, Method of Payment and Post-Acquisition Performance: The UK Evidence', Journal of Business Finance & Accounting, Vol. 30, pp. 299-341.
92. _, P. Holl and A. Salami (1996), 'Shareholder Wealth Gains in Mergers: Effect of Synergy and Ownership Structure', Journal of Business Finance & Accounting, Vol. 23, pp. 673-98.
93. Vafeas, N. (1999), 'Board Meeting Frequency and Firm Performance', Journal of Financial Economcis, Vol. 53, pp. 113-42.
94. Ware, R.F. (1975), 'Performance of Manager- versus Owner-controlled Firms in the Food and Beverage Industry', Quarterly Journal of Economics and Business, Vol. 15, pp. 81-92.
95. Weir, C., D. Laing and P.J. McKnight (2002), 'Internal and External Governance Mechanisms: Their Impact on the Performance of Large UK Public Companies', Journal of Business Finance & Accounting, Vol. 29, pp. 579-611.
96. Weston, J.F. (1979), 'The Tender Takeover', Mergers and Acquisitions, pp. 74-82.
97. Wright, P., M. Kroll and D. Elenkov (2002), 'Acquisition Returns, Increase in Firm Size and Chief Executive Officer Compensation: The Moderating Role of Monitoring', Academy of Management Journal, Vol. 45, No. 3, pp. 599-608.
98. You, V., R. Caves, M. Smith and J. Henry (1986), 'Mergers and Bidders Wealth: Managerial and Strategic Factors', in L. Thomas (eds.), The Economics of Strategic Planning: Essays in Honour of Joel Dean (Mass: Lexington).
99. Zeitlin, M. and S. Norich (1979), 'Management Control, Exploitation, and Profit Maximization in the Large Corporation: An Empirical Confrontation of Managerialism and Class Theory', Research in Political Economy.
100. Zhou, X. (2001), 'Understanding the Determinants of Managerial Ownership and the Link between Ownership and Performance: Comment', Journal of Financial Economics, Vol. 62, pp. 559-71.