THE EFFECTS OF CORPORATE RESTRUCTURING ON AGGREGATE INDUSTRY SPECIALIZATION

It has been widely argued that the purpose of corporate restructuring during the 1980s was to produce a population of more industry-specialized, competitive firms in response to intensifying global competition. A number of studies show that corporate restructuring resulted in increased corporate focus during the 1980s. However, no study has yet examined whether corporate restructuring resulted in increased specialization at the industry level during the 1980s. This study examines this issue. First, we examine whether or not aggregate industry specialization increased during the 1980s. That is, we ask: did the average firm in any given U.S. industry become more or less specialized to that industry during the 1980s? Second, we examine whether corporate restructuring was a significant determinant of change in aggregate industry specialization during the 1980s. Using a sample of 686 four-digit SIC industries and 64 two-digit industry groups, this study finds that aggregate industry specialization declined very slightly at both the four-digit and two-digit level between 1981 and 1989. This study also finds that sell-offs of establishments through corporate control transactions or interfirm asset sales had no significant effect on aggregate industry specialization.     

CORPORATE GOVERNANCE WITHIN THE CONTEXT OF ANTITAKEOVER PROVISIONS

This paper advances understanding of corporate governance relationships with a longitudinal study of multiple antitakeover options. Prior analyses have been primarily cross-sectional, focused exclusively on a single provision ignoring provisions which require subsequent stockholder approval. The current study uses agency theory, and broadens this perspective by examining the differential impact of institutional investors stockholding, managerial stock ownership, and corporate board characteristics on the rate of adoption of six provisions, including provisions which do and do not require stockholder approval. Results of hazard analyses of the rate of amendment adoption of 185 firms between 1984 and 1988 indicate that the impact of governance variables on antitakeover provisions differ depending on whether these actions require stockholder approval or not. The pattern of differences indicates that institutional investors use their voting power when they are given an opportunity to vote and that substitution between direct shareholder control and managerial stock ownership exists.     

AGENCY CONFLICT AND CORPORATE STRATEGY: THE EFFECT OF DIVESTMENT ON CORPORATE VALUE

Among the various stakeholders of a firm, senior managers are the most likely targets for private and public political pressures. Other stakeholder groups are less visible and may be perceived as less influential in corporate strategy formulation and implementation. In some situations, consequently, senior executives may adopt corporate strategies in response to political pressures even if these strategies may be costly to shareholders. In this study, a special case is examined: the effect of divestment of South African business units on firm value. Using data from 1984 through 1990, we examine the impact that announcements of divestments have upon the stock return behavior of publicly traded firms. Our results indicate that significant and negative excess returns accrue to shares of companies announcing divestments of South African operations. These results are supportive of the premise that noneconomic pressures may influence managerial strategies rather than value-enhancement goals. © 1997 by John Wiley & Sons, Ltd.     

AN EVOLUTIONARY PERSPECTIVE ON DIVERSIFICATION AND CORPORATE RESTRUCTURING: ENTRY,EXIT, AND ECONOMIC PERFORMANCE DURING 1981–89

This study proposes a theoretical perspective that firms engage in continuous search and selection activities in order to improve their knowledge base and thereby improve their performance. This general framework is applied to the context of corporate evolution. Entry and exit activities are understood as search and selection undertaken by the firm to improve their performance. One of the compelling features of this framework is that firms learn from their past entry experience and approach the next entry in a more focused and directed manner over time. Also, firms acquire additional knowledge from each entry event while applying their existing knowledge base. With a longitudinal (1981–89) data base on entry and exit activities of all publicly traded manufacturing firms in the United States, this study shows that applicability of the firm's knowledge base plays an important role in predicting which businesses a firm enters or exits. Firms sequentially enter businesses of similar human resource profiles and firms are more likely to divest lines of business of different profiles. Corporate-level analysis shows that such well-directed entry and exit contribute to the improvement of a firm's profitability.     

The role of CEO relative standing in acquisition behavior and CEO pay

In this study, we develop and test a theory of CEO relative pay standing. Specifically, we propose that CEOs with negative relative pay standing status (underpaid relative to comparison CEOs) will engage in acquisition activity, as a self‐interested means of attempting to realign their pay with that of their peers. We further propose that, when CEOs with negative relative pay standing acquire, they will tend to finance those acquisitions more heavily with stock than cash, to mitigate the risk associated with those deals. Finally, we argue that acquisition activity will partially mediate the influence of CEO negative relative pay standing on subsequent CEO compensation increases; however, that pay growth will come primarily in the form of long‐term incentive pay. Our results support our predictions. Copyright © 2014 John Wiley & Sons, Ltd.     

FORM OF CONTROL: A CRITICAL DETERMINANT OF ACQUISITION PERFORMANCE AND CEO REWARDS

Based on two research streams, we investigate whether acquiring firms’ form of control might be associated differently with CEO rewards or excess returns. We theoretically reason that in manager-controlled corporations acquisitions may be detrimental to the interests of shareholders and CEO rewards might be based on nonperformance criteria. In owner-manager-controlled and owner-controlled firms acquisitions may benefit the stockholders. While CEO rewards of owner-controlled firms may be based on performance criteria, however, executive rewards of owner-manager-controlled firms may be based on both performance and nonperformance factors. The findings indicate that for manager-controlled firms acquisition announcements result in negative excess returns to shareholders. For owner-controlled and owner-manager-controlled firms such announcements result in positive excess returns. The findings also suggest that increases in corporate size due to acquisitions are significantly and positively associated with CEO rewards of manager-controlled and owner-manager-controlled firms. For owner-controlled firms, excess returns are significantly and positively associated with CEO rewards. © 1997 by John Wiley & Sons, Ltd.     

Longevity and the life-cycle of management buy-outs

The longevity debate about buy-outs has hitherto been restricted. By focusing on large highly leveraged transactions, existing research has taken only a partial view of how long buy-outs last and the factors influencing longevity. This paper develops and tests hypotheses concerning the influences on buy-out longevity across the whole spectrum of management buy-out applications. Both quantitative and case study evidence from the U. K. is presented. A heterogeneity view of buy-outs is supported. Tests using quantitative data show that earlier exit is associated with larger buy-outs, and buy-outs arising on privatization from the public sector and from non-U. K. parents. Case study evidence principally supports hypotheses that earlier exit is associated with financing institutions being in a relatively stronger position than management and with more rapidly changing market conditions for the firm.     

Last dance or second chance? Firm performance,CEO career horizon,and the separation of board leadership roles

In recent years, many firms have chosen to separate their CEO and board chair positions. Prior research has demonstrated that there are three forms that a CEO–board chair separation can take: apprentice, departure, and demotion. In this paper, we examine the antecedents of these three types. Our results show that the three types of separation each have different profiles in terms of the prior performance of the firm, the independence of the board, and the career horizon of the incumbent CEO. The findings in this paper provide unique insights into the factors that drive boards' structural choices. As questions about board leadership structure become more nuanced and more relevant in both scholarship and practice, a full understanding of these factors will only become more important. Copyright © 2013 John Wiley & Sons, Ltd.     

Social network contingency,symbolic management,and boundary stretching

A firm's structural position within corporate networks may affect the extent to which it engages in boundary stretching practices. Since social norms support low CEO compensation, offering high CEO compensation in China can be seen as a boundary stretching practice. Setting up a compensation committee (CC) may be viewed as a form of symbolic management in China. We argue that firms operating within central corporate network positions opt to pay higher CEO compensation without engaging in symbolic management. On the other hand, firms operating in structural hole positions tend to either pay lower CEO compensation or use CCs as a symbolic management tool in order to pay higher CEO compensation. Our hypotheses are largely supported based on 7,618 firm‐year observations in China. Copyright © 2013 John Wiley & Sons, Ltd.     

INSTITUTIONAL INVESTORS AND FIRM INNOVATION: A TEST OF COMPETING HYPOTHESES

There is much debate about the effect of institutional investors on firm innovation. This paper tests three competing hypotheses by including differences among institutions in their ability to influence firms. Results using an outcome-based measure of innovation indicate that institutions do not foster short-term orientation; instead they may influence firms to increase innovation.     

TAKEOVER DEFENSES,OWNERSHIP STRUCTURE AND STOCK RETURNS IN THE NETHERLANDS: AN EMPIRICAL ANALYSIS

This study empirically examines the relationships between a firm’s takeover defenses and its ownership structure and stock returns. Analyzing data of Dutch listed companies, we find that multiple antitakeover defenses are increasingly adopted when firms are characterized by relatively lower ownership concentration. The evidence supports the hypothesis that more concentrated ownership of shares provides more effective monitoring of managers. As defense by issuing preferred share has recently been the most widely adopted mechanism in the Netherlands, its impact on shareholders’ wealth is also analyzed. We observe the presence of two opposing effects of this antitakeover measure. © 1997 by John Wiley & Sons, Ltd.     

THE CORPORATE SOCIAL PERFORMANCE–FINANCIAL PERFORMANCE LINK

Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.© 1997 by John Wiley & Sons, Ltd     

Social influence effects and managerial compensation evidence from Germany

I extend existing theories of social influence effects on executive compensation while at the same time showing the context dependence of these effects. Using original data on German firms and a longitudinal design, results of this study suggest that the operating of social influence mechanisms depends on demographic and social similarity between CEOs and board chairs. The findings reconcile previous mixed findings on the role of CEO human capital factors such as education and tenure and furthermore show that board vigilance is conditional on board compensation and the presence of major shareholders with an incentive to monitor board behavior. Finally, the study contributes to compensation and corporate governance research by providing evidence on how social influence effects operate outside the United States. Copyright © 2006 John Wiley & Sons, Ltd.     

THE ASSOCIATION BETWEEN THE USE OF SOPHISTICATED CAPITAL BUDGETING PRACTICES AND CORPORATE PERFORMANCE

Since the early 1950s, the academic community has tried lo convince corporate managers that there are sophisticated techniques that can improve the capital budgeting decision-making process. Over the years, many studies have documented a trend toward increasing business use of such sophisticated capital budgeting techniques. However, there is no clear evidence whether better performing companies are more likely to employ sophisticated capital budgeting processes than are lower performing companies. This study is an attempt to measure the relationship between capital budgeting sophistication and business performance. It advances upon earlier studies by utilizing a more comprehensive capital budgeting sophistication metric, incorporating industry-adjusted independent variables (firm size, risk, capital intensity, and degree of focus), and by focusing on United States corporations. The results are similar with those of earlier studies; there is no discernible relationship between capital budgeting sophistication and corporate performance.     

公司治理机制与高管薪酬决定研究最新进展综述

基于坚实的理论基础和丰富的数据环境,有关高管薪酬的研究在近十几年来得以迅速发展,并成为经济学、管理学等学科的重要研究领域。由本次国际金融危机引发的全球＂限薪＂浪潮,更是加深了公众对如何从公司治理层面强化企业高管薪酬治理的关注程度。文章系统梳理了国外关于公司治理机制与高管薪酬决定研究的最新成果,并对后续研究进行了展望。     

ASSET REDEPLOYMENT,ACQUISITIONS AND CORPORATE STRATEGY IN DECLINING INDUSTRIES

The resource-based perspective suggests that firms are bundles of assets, some of which are fungible in nature. To the extent that some resources are fungible, firms should be able to redeploy them to enter new markets when their existing businesses decline. On the other hand, perspectives that emphasize the business-specific nature of routines or managerial skills point to inherent risks in organizational transformation. In a declining market, resources can be redeployed within the firm through diversification-oriented acquisitions, or they can be redeployed through market mechanisms through consolidation-oriented acquisitions. In this paper, we examine the differences in performance outcomes between diversification-oriented acquisitions and consolidation-oriented acquisitions in industries within the defense sector, which have experienced significant decline. Our results indicate that consolidation-oriented acquisitions outperform diversification-oriented acquisitions in the decline phase of their industries in terms of both ex ante (stock market based) and ex post (operating) performance measures. At the corporate level, we find a positive relationship between focus and Tobin’s q, even when the industry is in decline. The implication of our results is that assets from declining industries are redeployed more effectively through market mechanisms than within the firm through the acquisition of complementary assets. ©1997 by John Wiley & Sons, Ltd.     

The persistence of founder influence: management,ownership, and performance effects at initial public offering

The purpose of this research is to apply a conceptual framework to questions of how, why, and when founders participate in the firms that they establish and to empirically test for the persistent influence of the founder on the firm after start‐up. A definition of the term ‘founder’ is proposed. Empirical tests compare firms with founder CEOs to those with nonfounder CEOs to determine whether governance and ownership relationships are distinguishable at initial public offering (IPO). In addition, investor reaction to founder‐led firms at IPO is tested. Results suggest that founder influence does persist in governance and ownership arrangements and that the stock market reaction to founder‐led firms is higher than for the comparison group, relative to accounting value. Copyright © 2003 John Wiley & Sons, Ltd.