Corporate governance, investment bandwagons and overcapacity: An analysis of the worldwide petrochemical industry, 1975-95

• 成果类型: Article
• 署名作者: Henderson, J; Cool, K
• 署名单位: Babson College; INSEAD Business School
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.302
• 发表日期: 2003
• 页码: 349-373
• 关键词: CORPORATE GOVERNANCE; capacity expansion; overinvestment

摘要

Previous research has provided conflicting arguments and evidence on which corporate governance system-bank based or market based-is better in preventing managers from investing in value-destroying projects. This paper attempts to further the debate by comparing the effect of these different corporate governance systems on preventing capacity expansion bandwagon behavior in the worldwide petrochemical industry in the period 7975-95. Our study shows, first, that neither system is particularly effective in curbing overinvestment; however, the market-based system seems to be less ineffective than the bank-based system. Second, free cash flow appears to drive greater bandwagon behavior in the market-based system than in the bank-based system. Finally, within the bank-based system, companies that rely on one bank-shareholder are more likely to join the bandwagon than those with more than one. Copyright (C) 2003 John Wiley Sons, Ltd.