Download or read book Managerial Entrenchment and the Choice of Debt Financing written by Mr.Amadou N. R. Sy and published by International Monetary Fund. This book was released on 1999-07-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm’s credit risk is low, management issues public bonds because of the value gains from increased flexibility rather than reduced restrictions and monitoring. In fact, management’s expected private gains decrease as initial private debt restrictions are selectively relaxed. In contrast, when credit risk is high, management issues private debt because of the value gains and private benefits from renegotiating more stringent restrictions. When the maturity of private debt is shortened, however, privately and publicly placed bonds can be preferred to bank debt.
Download or read book Managerial Entrenchment written by Andrei Shleifer and published by . This book was released on 1988 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Managerial Entrenchment and the Market for Talent written by Fabio Feriozzi and published by . This book was released on 2016 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies how the generality of managerial skills affects firms' governance decisions. As managerial skills become less firm-specific and more portable across firms, the market for talent offers better opportunities for replacing an incumbent chief executive officer (CEO) with an external hire. This results in higher pay in the market, but, overall, the profitability of an external appointment increases in large firms, where managerial talent is most productive. As a consequence, large firms limit the entrenchment of incumbent managers to take advantage of the improved replacement opportunities offered by the market. The analysis rationalizes the recent trend toward stronger corporate governance and offers novel empirical predictions concerning the relationship between managerial entrenchment, firm size and the generality of managerial skills.
Download or read book Pay Without Performance written by Lucian A. Bebchuk and published by Harvard University Press. This book was released on 2004 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
Download or read book The Outsiders written by William Thorndike and published by Harvard Business Press. This book was released on 2012 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt: It's time to redefine the CEO success story. Meet eight iconoclastic leaders who helmed firms where returns on average outperformed the S&P 500 by more than 20 times.
Download or read book Managerial Entrenchment and Performance of Firms written by Nejla Ould Daoud Ellili and published by . This book was released on 2006 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this article is to determine the relation between managerial ownership and the performance of firms as well as the impact of managerial entrenchment on the firms' financial policy.The analyses of regressions on 283 firms show that the relation between the managerial ownership and the performance of firms is non linear. It takes the shape of the alignment, then of the entrenchment, then again of the alignment, as the managerial ownership increases. The manager possessing a part of capital between 5.72% and 55.47% is more susceptible to be entrenched and he/she prefers a weak ratio of debt to escape both the shareholders' control and the market's pressures of performance.
Download or read book Managerial Entrenchment and Capital Structure Decisions written by Berger Philip G. and published by . This book was released on 2008 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study associations between managerial entrenchment and firms capital structures, with results generally suggesting that entrenched CEOs seek to avoid debt. In a cross-sectional analysis, we find that leverage levels are lower when CEOs do not face pressure from either ownership and compensation incentives or active monitoring. In an analysis of leverage changes, we find that leverage increases in the aftermath of entrenchment-reducing shocks to managerial security, including unsuccessful tender offers, involuntary CEO replacements, and the addition to the board of major stockholders.
Download or read book Managerial Entrenchment and Capital Structure Decisions written by Philip G. Berger and published by . This book was released on 1995 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Managerial Entrenchment and Information Production written by Chen Lin and published by . This book was released on 2018 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we evaluate the effect of managerial entrenchment on corporate information production using the voting outcomes of shareholder-initiated proposals intended to mitigate managerial entrenchment. We focus on the proposals that are passed or rejected by a small margin of votes, which generate plausibly exogenous variations in managerial entrenchment. We find that a reduction in managerial entrenchment enhances corporate information production. The effects are stronger for firms with greater information asymmetries and severer agency frictions. Overall, the evidence is consistent with the view that reducing managerial entrenchment enhances corporate disclosure by aligning the incentives of managers and shareholders.
Download or read book Managerial Entrenchment and the Effectiveness of Internal Governance Mechanisms written by Mark M. McNabb and published by . This book was released on 1998 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test the effectiveness of internal corporate governance systems by examining the replacement of founder CEOs at poor performing firms. Managerial entrenchment in these firms is expected to constrain the effectiveness of external corporate governance through the market for corporate control. Specifically, we study the replacement of founder CEOs at firms that have performed poorly based on two-year stock returns that rank them in the bottom 5% of all AMEX and NYSE firms. We find that simply replacing a founder CEO is not sufficient to increase long-term stock returns. However, shareholders do receive a wealth gain if the founder leaves both the firm and the board. This suggests that managerial entrenchment is a significant deterrent to improving the fortunes of poor performing firms led by a founder CEO. In addition we find that they are less likely than non-founder led firms to (i) replace a CEO in a poorly performing firm, (ii) replace the CEO with a financier, (iii) experience financial distress, (iv) file for bankruptcy, (v) engage in asset restructuring, or (vi) be targeted for takeover.
Download or read book Managerial Entrenchment and Capital Structure Decisions written by Philip G. Berger and published by . This book was released on 1997 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study associations between managerial entrenchment and firms' capital structures, with results generally suggesting that entrenched CEOs seek to avoid debt. In a cross- sectional analysis, we find that leverage levels are lower when CEOs do not face pressure from either ownership and compensation incentives or active monitoring. In an analysis of leverage changes, we find that leverage increases in the aftermath of entrenchment-reducing shocks to managerial security, including unsuccessful tender offers, involuntary CEO replacements, and the addition to the board of major stockholders.
Download or read book Management Entrenchment Reputation and Ownership written by I. J. Alexander Dyck and published by . This book was released on 1997 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper furthers understanding of agency costs by simultaneously examining management entrenchment and the potential disciplining force of the managerial labor market. I show that the labor market's ability to constrain rent seeking activities depends upon the precision of measures of management ability provided by current firm performance. The paper emphasizes how noise in the economic environment adds to imprecision and provides a shield for entrenchment activities, managers hiding their entrenchment behind the noise. Applying the model, I suggest that the identity of the owners of a firm affects the noise in the economic environment. The crux of the argument is that the labor market has a more difficult time discerning the objectives conveyed to managers in state-owned firms than in private-sector firms. Optimally, the labor market places a lower weight on current firm performance relative to previous signals of management ability in state-owned firms, thus encouraging more entrenchment activity. The paper suggests mechanisms to improve the efficiency of the labor market and helps rationalize differences in the restrictions placed on management discretion between state owned and private-sector firms.
Download or read book Managerial Entrenchment written by Nejla Ould Daoud Ellili and published by . This book was released on 2006 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this article is to measure the degree of managerial entrenchment and to study its impact on the performance of the firm. The modeling of the entrenchment's degree is based both on the personal characteristics of the manager and on the ownership structure of the firm. According to our empirical studies carried on 815 firms during the period 2001-2004, the entrenchment's degree depends significantly on the age and the tenure of the manager as well as the relative power of the managerial ownership.Moreover, the relation between the managerial entrenchment and the performance of the firm isn't linear. It takes the form of a harmful entrenchment then of a beneficial one as the entrenchment's degree increases. This shows that the managerial entrenchment isn't always harmful to shareholders wealth. Empirically, by exceeding a certain critical level (0.81), the managerial entrenchment becomes beneficial to the shareholders.
Download or read book Executive Compensation and the Optimality of Managerial Entrenchment written by Gary B. Gorton and published by . This book was released on 2008 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms are more complicated than standard principal-agent theory allows: firms have assets-in-place; firms endure through time, allowing for the possibility of replacing a shirking manager; firms have many managers, constraining the amount of equity that can be awarded to any one manager; and, a firm's owner can transfer some control to a manager, thereby entrenching her. Recognizing these characteristics, we solve for the vesting dates; wage, equity and options components; and control rights of an optimal contract. Managerial entrenchment makes the promise of deferred compensation credible. Deferring compensation by delaying vesting reduces a manager's ability to free-ride on a replacement's effort.
Download or read book How Do Managerial Entrenchment and Expropriation Affect Control Mechanisms written by Alberto de Miguel and published by . This book was released on 2009 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes a new empirical approach that allows us to appropriately control for the non-linearities of ownership with respect to firm value when analysing how managerial entrenchment and expropriation affect the relations among control mechanisms. Unlike findings in previous US-based studies, which in general point to substitutability among mechanisms, our results show that control mechanisms (especially insider ownership, debt and dividends) are used in a complementary way by Spanish firms. In addition, this complementarity is only observed when the interests of managers and owners converge, but not when there are controlling owners - insiders or outsiders - whose interests need not coincide with those of minority shareholders. Therefore, managerial entrenchment and expropriation effects do influence the relationship among agency-cost control mechanisms.
Download or read book Managerial Entrenchment and Capital Structure written by Shuangshuang Ji and published by . This book was released on 2018 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically examines how diversification influences the relation between corporate governance and capital structure. Consistent with the creditor alignment hypothesis, we find a positive relation between managerial entrenchment and leverage in diversified firms. In contrast, we find a negative relation between managerial entrenchment and leverage in focused firms, which supports the managerial entrenchment hypothesis. These effects are stronger or only exist in samples with low excess values, which supports the agency channel through which governance influences leverage decisions. The results are robust to different measures of leverage, diversification, and governance, and continue to hold when we correct for selection bias and account for the joint endogeneity of leverage, diversification, and governance. Our evidence shows that the conflict in the literature on the relation between leverage and managerial entrenchments is because earlier empirical studies do not condition on the diversification status of firms. Entrenched managers in focused firms eschew leverage, whereas entrenched managers in diversified firms take advantage of their better access to debt finance and use more financial leverage.
Download or read book Understanding and Managing Strategic Governance written by Wei Shi and published by John Wiley & Sons. This book was released on 2021-08-04 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: Explore the interplay between corporate governance and strategic decision-making in this startling new resource In Understanding and Managing Strategic Governance, strategy and management experts Dr. Wei Shi and Robert E. Hoskisson deliver an insightful exploration of the influence that governance actors, like the board of directors, activist investors, institutional investors, and securities analysts, have on important strategic decisions. Based on surveying the latest research and analyzing unique datasets compiled by the authors, the book explains the impact that governance actors have on a firm’s strategic choices and the quality of such choices as well as the unintended consequences of that impact. The authors also describe how executives can manage the conflicting interests of multiple governance actors and leverage the influence of these actors to make effective strategic decisions. In this book, you’ll discover: How to avoid the strategic pitfalls that arise from governance actor influence and harm firms’ long-term competitiveness The effect that governance actors can have on corporate strategy, competitive strategy, corporate innovation strategy, global strategy, stakeholder strategy, and more The latest trends in corporate governance and their implications for managers, regulators, and policy makers in this area Perfect for C-level executives, board of directors, and institutional investors as well as students of corporate governance and strategy, Understanding and Managing Strategic Governance is a revealing and original examination of the interplay between corporate governance and firm strategy and how to manage that interplay to create sustainable competitive advantages.
