Nonshareholder constituency statutes and shareholder wealth: A note |
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| Institution: | 1. Department of Finance, Clemson University, 314 Sirrine Hall, Clemson, SC 29634-1323, USA;2. Financial Economics Network, Pflugerville, TX 78660, USA;1. Advanced Industrial & Manufacturing Systems Program, Mechanical Engineering Department, TEI of Piraeus, Greece;2. Advanced Industrial & Manufacturing Systems Program, Mechanical Engineering Department, Technological Education Institute of Piraeus, Attica, Greece, and Kingston University, London, UK.;1. EPEE, University of Evry, France;2. Eurofidai, CNRS, Leonard de Vinci Research Center, France;3. IPAG Business School, CNRS, PSE, VCREME, France;1. Carnegie Mellon, USA;2. National Bureau of Economic Research, USA;3. University of Florida, USA;1. Korea University Business School, Anam-ro, Seongbuk-gu, Seoul 02841, Republic of Korea;2. Department of Finance and Law, College of Business and Economics, California State University, Los Angeles, United States |
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| Abstract: | We assess the effects of the introduction and passage of state nonshareholder constituency statutes on shareholder wealth. We find a small, but significantly negative effect on shareholder wealth for companies incorporated in states passing nonshareholder constituency statutes that did not already have corporate takeover defenses in place. Further, we find that firms that are poorly managed (as proxied by low market-to-book ratios) react more negatively to the statutes. |
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