Board structure and price informativeness Ferreira, Daniel; Ferreira, Miguel A.; Raposo, Clara C.
Journal of financial economics,
03/2011, Letnik:
99, Številka:
3
Journal Article
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We develop and test the hypothesis that stock price informativeness affects the structure of corporate boards. We find a negative relation between price informativeness and board independence. This ...finding is robust to the inclusion of many firm-level controls, including firm fixed effects, and to the choice of the measure of price informativeness. Consistent with the hypothesis that price informativeness and board monitoring are substitutes, this relation is particularly strong for firms more exposed to both external and internal governance mechanisms and for firms in which firm-specific knowledge is relatively unimportant. Our results suggest that firms with more informative stock prices have less demanding board structures.
We aim to tackle the longstanding debate on whether stock liquidity enhances or impedes firm innovation. This topic is of interest because innovation is crucial for firm- and national-level ...competitiveness and stock liquidity can be altered by financial market regulations. Using a difference-in-differences approach that relies on the exogenous variation in liquidity generated by regulatory changes, we find that an increase in liquidity causes a reduction in future innovation. We identify two possible mechanisms through which liquidity impedes innovation: increased exposure to hostile takeovers and higher presence of institutional investors who do not actively gather information or monitor.
This is a book about acquisitions and their performance. It looks at the different ways in which companies from the major acquiring countries (UK, USA, Japan, Germany, and France) set about ...integrating the acquisitions they make in the UK. The book illustrates different national styles at work, but also shows how common many management practices have become around the world.
•Pupil diameter can be used as an objective indicator of drivers’ mental workload.•Drivers showed increased fluctuations in workload levels during automated driving.•Driver workload increased around ...takeovers, as they came back into the driving loop.•Shorter headways increased workload during takeovers, but not during automation.
This Horizon2020-funded driving simulator-based study on automated driving investigated the effect of different car-following scenarios, and takeover situations, on drivers’ mental workload, as measured by eye tracking-based metrics of pupil diameter and self-reported workload ratings. This study incorporated a mixed design format, with 16 drivers recruited for the SAE Level 2 (L2; SAE International, 2021) automation group, who were asked to monitor the driving and road environment during automation, and 16 drivers in the Level 3 (L3) automation group, who engaged in a non-driving related task (NDRT; Arrows task) during automation. Drivers in each group undertook two experimental drives, lasting about 18 min each. To manipulate perceived workload, difficulty of the driving task was controlled by incorporating a lead vehicle which maintained either a Short (0.5 s) or Long (1.5 s) Time Headway (THW) condition during automated car-following (ACF). Each ACF session was followed by a subsequent request to takeover, which happened either in the presence or absence of a lead vehicle. Results from standard deviation of pupil diameter values indicated that drivers’ mental workload levels fluctuated significantly more when monitoring the drive during L2 ACF, compared to manual car-following (MCF). Additionally, we found that drivers’ mental workload, as indicated by their mean pupil diameter, increased steeply around takeovers, and was further exacerbated by the presence of a lead vehicle during the takeovers, especially in the Short THW condition, for both groups. Pupil diameter was found to be sensitive to subtle variations in mental workload, and closely resembled the trend seen in self-reported workload ratings. Further research is warranted to assess the feasibility of using eye-tracking-based metrics along with other physiological sensors, especially in real-world settings, to understand whether they can be used as real-time indicators of drivers’ mental workload, in future driver state monitoring systems.
Capital Investments and Stock Returns Titman, Sheridan; Wei, K. C. John; Xie, Feixue
Journal of financial and quantitative analysis,
12/2004, Letnik:
39, Številka:
4
Journal Article
Recenzirano
Odprti dostop
Firms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation is shown to be stronger for ...firms that have greater investment discretion, i.e., firms with higher cash flows and lower debt ratios, and is shown to be significant only in time periods when hostile takeovers were less prevalent. These observations are consistent with the hypothesis that investors tend to underreact to the empire building implications of increased investment expenditures. Although firms that increase capital investments tend to have high past returns and often issue equity, the negative abnormal capital investment/return relation is independent of the previously documented long-term return reversal and secondary equity issue anomalies.
This paper examines the role of firm-level experience in the context of divestitures. We find that divesting firms that have recent divestiture experience (hereafter, experienced divestors) are more ...likely to sell peripheral or underperforming units, and to divest during industry merger waves. Experienced divestors earn higher returns on divestiture announcement, have stronger operating performance post-divestiture, and tend to reinvest sale proceeds in expansion programs using acquisitions. Importantly, we show that divestiture experience at the firm level dominates other measures of experience, including divestiture experience of CEOs or boards, and experience in acquisitions. We take steps to mitigate concerns about econometric and sampling issues. These findings suggest that a strategy of restructuring through divestitures can improve firm value.
The desirability of antitakeover provisions (ATPs) is a contentious issue. ATPs might enable managerial empire building by insulating managers from disciplinary takeovers. However, some companies, ...such as "hard-to-value" (HTV) companies, might trade at a discount due to valuation difficulties, thereby exposing HTV companies to opportunistic takeovers and creating agency conflicts of managerial risk aversion. ATPs might ameliorate such managerial risk aversion by inhibiting opportunistic takeovers. This paper analyzes acquisitions made by HTV firms, focusing on whether the acquirer (not the target) is entrenched in order to examine the impact of entrenchment managerial decision making. The results show that HTV firms that are entrenched make acquisitions that generate more shareholder wealth and are more likely to increase corporate innovation, suggesting that ATPs can be beneficial in some firms.
Ladha's expertise lies in providing strategic and regulatory advice in relation to substantial acquisition of control/ shareholding in listed companies and innovative investment structures through ...court schemes, including setting up of payment settlement banks, registration under money transfer service schemes, acquisitions involving trigger of a mandatory offer under Indian securities regulations, structured investments, obtaining post facto approval, dealing with inadvertent contravention both at the Reserve Bank of India and the Securities and Exchange Board of India, inbound as well as outbound acquisitions, corporate restructuring, structured financing, acquisition financing, and structuring quasi-equity and debt investment structures across various sectors. which the term is used in specific instances. The deficiency in global supply of critical goods, along with the possibility of hostile takeovers, strengthened the nationalistic tendencies of countries. Since 2020, the world has witnessed the growth of increasingly protectionist FDI policies. No democratically elected government explicitly espouses protectionism, as the underlying objective of such governments is economic growth and increased capital inflows into domestic economies. ...the abstract concept of protectionism is to be evaluated against specific criteria indicated by governments, such as 'national or security interest' or 'public interest'. Another important concern flowing from this question is whether the company operating in the host jurisdiction is pursuing strategic objectives of their home state, especially in sensitive sectors. ...whether geopolitical tensions are real or imagined, they play a significant role in influencing the regulatory policies of different countries.
We study the effects of takeover feasibility on asset prices and returns in a unified framework. We show theoretically that takeover protections increase equity risk, stock returns, and bond yields ...by removing a valuable put option to sell the firm, notably for firms approaching distress. We investigate these claims empirically and find that distressed firms experience a significant decrease in value and increase in returns and market betas after the passage of antitakeover laws, in line with our predictions. At issue bond yields are also higher when an antitakeover law is in effect. Consistent with the model, the effects of antitakeover laws on stock returns, respectively, bond yields, are greater when shareholders, respectively, bondholders, have greater bargaining power.
This paper was accepted by Lukas Schmid, finance.
Funding: E. Morellec acknowledges financial support from the Swiss Finance Institute.
Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03111 .
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