Abstract

http://ssrn.com/abstract=1537079
 
 

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Managerial Entrenchment and Firm Value: A Dynamic Perspective


Xin (Simba) Chang


Nanyang Business School

Hong Feng Zhang


Deakin University - School of Accounting, Economics and Finance

March 5, 2013


Abstract:     
We examine the impact of managerial entrenchment on firm value using a dynamic model with firm fixed effects. To estimate the model, we employ the long difference technique, which is shown by our simulation to deliver the least biased estimates. Based on a large sample of U.S. companies, we document a significantly negative and causal effect of managerial entrenchment on firm value after taking into account omitted variables, reverse causality, and highly persistent endogenous variables. Additional analysis suggests that the causality running from managerial entrenchment to firm value is more pronounced than reverse causality.

Number of Pages in PDF File: 36

Keywords: Corporate Governance, Managerial Entrenchment, Long Difference Estimator, Reverse Causality, Panel VAR

JEL Classification: G3, G34, L25

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Date posted: January 18, 2010 ; Last revised: August 3, 2013

Suggested Citation

Chang, Xin (Simba) and Zhang, Hong Feng, Managerial Entrenchment and Firm Value: A Dynamic Perspective (March 5, 2013). Available at SSRN: http://ssrn.com/abstract=1537079 or http://dx.doi.org/10.2139/ssrn.1537079

Contact Information

Xin Chang
Nanyang Business School ( email )
S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore
HOME PAGE: http://www.ntu.edu.sg/home/changxin
Hong Feng Zhang (Contact Author)
Deakin University - School of Accounting, Economics and Finance ( email )
221 Burwood Highway
Burwood, Victoria 3215
Australia
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