Does protectionist anti-takeover legislation lead to managerial entrenchment?

• 成果类型: Article
• 署名作者: Frattaroli, Marc
• 署名单位: Swiss Finance Institute (SFI); Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.03.014
• 发表日期: 2020
• 页码: 106-136
• 关键词: Protectionism; corporate governance; Mergers and Acquisitions; Executive compensation; Free cash flow problem

摘要

I study a protectionist anti takeover law introduced in 2014 that covers a subset of all firms in the economy. The law decreased affected firms' likelihood of becoming the target of a merger or acquisition and had a negative impact on shareholder value. There is no evidence that management of those firms subsequently altered firm policies in its interest. Investment, employment, wages, profitability, and capital structure remain unchanged. The share of annual CEO compensation consisting of equity instruments increased by 8.4 percentage points, suggesting that boards reacted to the loss in monitoring by the takeover market by increasing the pay-for-performance sensitivity. (C) 2019 Elsevier B.V. All rights reserved.