Identifying Corporate Governance Effects:The Case of Universal Demand Laws

49 Pages Posted: 27 Jul 2022

See all articles by Byung Hyun Ahn

Byung Hyun Ahn

University of California, Berkeley - Haas School of Business

Panos N. Patatoukas

Berkeley Haas

Steven Davidoff Solomon

University of California, Berkeley - School of Law; European Corporate Governance Institute (ECGI)

Date Written: July 21, 2022

Abstract

An emerging line of research finds that firms incorporated in Universal Demand (UD) law adopting states experience an increase in the use of entrenchment provisions. Our investigation shows that the empirical link between UD laws and management entrenchment is influenced by a small number of firms adopting antitakeover provisions after substantial long-term drops in value. Using hand-collected data, we provide case-by-case evidence that the vast majority of changes in the use entrenchment provisions are in fact announced before the enactment of UD laws and cannot be causally attributed to UD laws. Our granular analysis has broad implications for law and finance research.

Keywords: Universal Demand Laws, Corporate Governance, E-Index, ISS Database

JEL Classification: G34, G38, K22, K41

Suggested Citation

Ahn, Byung Hyun and Patatoukas, Panos N. and Davidoff Solomon, Steven, Identifying Corporate Governance Effects:The Case of Universal Demand Laws (July 21, 2022). Available at SSRN: https://ssrn.com/abstract=4169314 or http://dx.doi.org/10.2139/ssrn.4169314

Byung Hyun Ahn

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Panos N. Patatoukas

Berkeley Haas ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

HOME PAGE: http://https://sites.google.com/berkeley.edu/panos

Steven Davidoff Solomon (Contact Author)

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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