ESOPs, takeover protection, and corporate decision-making |
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Authors: | William N Pugh John S Jahera Sharon Oswald |
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Institution: | (1) Department of Finance, Auburn University, 36849-5245 Auburn, Alabama;(2) Department of Management, Auburn University, 36849-5245 Auburn, Alabama |
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Abstract: | ESOPs have the potential to align the interests of employees and owners and may increase firm value. However, employee ownership
may also strengthen the position of entrenched management. The literature predicts that firms newly protected from takeover
threat will tend to (1) increase long-term investment and (2) require additional external monitoring, and/or (3) may use leverage
as part of an overall antitakeover strategy. We examined firms that have adopted ESOPs and find that firms raise the level
of capital expenditures, research and development expenditures, and dividends. (JEF G320) |
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Keywords: | |
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