Playing it safe? Managerial preferences, risk, and agency conflicts

• 成果类型: Article
• 署名作者: Gormley, Todd A.; Matsa, David A.
• 署名单位: University of Pennsylvania; Northwestern University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.08.002
• 发表日期: 2016
• 页码: 431-455
• 关键词: risk; Managerial preferences; Agency conflicts; acquisitions

摘要

This article examines managers' incentive to play it safe. We find that, after managers are insulated by the adoption of an antitakeover law, they take value-destroying actions that reduce their firms' stock volatility and risk of distress. To illustrate one such action, we show that managers undertake diversifying acquisitions that target firms likely to reduce risk, have negative announcement returns, and are concentrated among firms with managers who gain the most from reducing risk. Our findings suggest that instruments typically used to motivate managers, such as greater financial leverage and larger ownership stakes, exacerbate risk-related agency challenges. (C) 2016 Elsevier B.V. All rights reserved.