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Returns to acquiring firms: The role of managerial ownership, managerial wealth, and outside owners

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  • Earl Shinn

Abstract

Since merger and acquisition activity does not unambiguously benefit the shareholders of acquiring firms, the motivation of managers who undertake such actions is unclear. The present study investigates the extent to which the wealth effects of acquisition activity undertaken by firms in one industry—communications and publishing—are related to (1) the ownership and wealth characteristics of both the executives and the board of directors of these firms and (2) the ownership concentration of large outside shareholders. The motivating hypothesis, supported by empirical results, is that these factors contribute to the alignment of executive and shareholder interests. Copyright Springer 1999

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  • Earl Shinn, 1999. "Returns to acquiring firms: The role of managerial ownership, managerial wealth, and outside owners," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(1), pages 78-89, March.
    • Handle: RePEc:spr:jecfin:v:23:y:1999:i:1:p:78-89
    DOI: 10.1007/BF02752689
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    References listed on IDEAS

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    1. Agrawal, Anup & Mandelker, Gershon N., 1990. "Large Shareholders and the Monitoring of Managers: The Case of Antitakeover Charter Amendments," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 25(2), pages 143-161, June.
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    4. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
    5. Jarrell, Gregg A & Brickley, James A & Netter, Jeffry M, 1988. "The Market for Corporate Control: The Empirical Evidence Since 1980," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 49-68, Winter.
    6. Dodd, Peter, 1980. "Merger proposals, management discretion and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 8(2), pages 105-137, June.
    7. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
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    Cited by:

    1. Warell, Linda, 2007. "A horizontal merger in the iron ore industry: An event study approach," Resources Policy, Elsevier, vol. 32(4), pages 191-204, December.
    2. Andy Cosh & Paul Guest & Alan Hughes, 2007. "UK Corporate Governance and Takeover Performance," Working Papers wp357, Centre for Business Research, University of Cambridge.
    3. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin, 2008. "Insider ownership, ownership concentration and investment performance: An international comparison," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 688-705, December.
    4. C Conn & A Cosh & P Guest & A Hughes, 2001. "Long-Run Share Performance of UK Firms Engaging in Cross-Border Acquisitions," Working Papers wp214, Centre for Business Research, University of Cambridge.
    5. Nai Chiek Aik & Taufiq Hassan & Shamsher Mohamad, 2015. "Do Malaysian Horizontal Mergers and Acquisitions Create Value?," Global Business Review, International Management Institute, vol. 16(5_suppl), pages 15-27, October.
    6. Hans-Martin Zademach, 2006. "Germany as an emerging archipelago economy: On some less obvious implications of corporate takeovers and mergers," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(1), pages 40-45, April.
    7. Andy Cosh & Paul M. Guest & Alan Hughes, 2006. "Board Share‐Ownership and Takeover Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3‐4), pages 459-510, April.

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