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Location, Managerial Entrenchment, and Short-Term Pressure

32 Pages Posted: 5 Feb 2016  

Ali C. Akyol

University of Melbourne - Department of Finance; Financial Research Network (FIRN)

Renjie (Rex) Wang

Erasmus University Rotterdam (EUR), Erasmus School of Economics (ESE), Students

Patrick Verwijmeren

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: February 1, 2016

Abstract

Prior studies have documented that geographic distance renders remotely located firms more difficult to monitor. This paper asks whether remote firms self-discipline by removing anti-takeover provisions. We find that remote firms are more likely to leave anti-takeover provisions in place, which further enhances managerial entrenchment. Interestingly, this entrenchment does not lead to worse investment decisions by remote firms. In fact, we provide evidence that being out of sight could benefit firms by mitigating short-term pressure from Wall Street.

Keywords: location, managerial entrenchment, short-term pressure

Suggested Citation

Akyol, Ali C. and Wang, Renjie (Rex) and Verwijmeren, Patrick, Location, Managerial Entrenchment, and Short-Term Pressure (February 1, 2016). FIRN Research Paper No. 2727695. Available at SSRN: https://ssrn.com/abstract=2727695 or http://dx.doi.org/10.2139/ssrn.2727695

Ali C. Akyol

University of Melbourne - Department of Finance ( email )

198 Berkeley Street
Faculty of Economics and Commerce
Carlton VIC 3010, Victoria 3010
Australia
+61 (3) 8344-5318 (Phone)
+61 (3) 8344-6914 (Fax)

HOME PAGE: http://www.aliakyol.com

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Renjie (Rex) Wang (Contact Author)

Erasmus University Rotterdam (EUR), Erasmus School of Economics (ESE), Students ( email )

P.O. Box 1738
Rotterdam, NL 3062 PA
Netherlands

Patrick Verwijmeren

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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