Concentrating on Governance

57 Pages Posted: 17 Mar 2006 Last revised: 16 Dec 2010

See all articles by Dalida Kadyrzhanova

Dalida Kadyrzhanova

Georgia State University

Matthew Rhodes-Kropf

Harvard Business School - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Date Written: November 15, 2010

Abstract

This paper develops a novel trade-off view of corporate governance. Using a simple model that integrates agency costs and bargaining benefits of management-friendly provisions, we identify the economic determinants of the resulting trade-offs for shareholder value. Consistent with the theory, our empirical analysis shows that provisions that allow managers to delay takeovers have a significant bargaining effect and a positive relation with shareholder value in concentrated industries. By contrast, non-delay provisions have an unambiguously negative relation with value, and more so in concentrated industries. Overall, our analysis suggests that there are governance trade-offs for shareholders and industry concentration is an important determinant of their severity.

Keywords: Corporate Governance, Industry Concentration, Antitakeover Provisions, Market for Corporate Control

JEL Classification: G30, G34

Suggested Citation

Kadyrzhanova, Dalida and Rhodes-Kropf, Matthew, Concentrating on Governance (November 15, 2010). Journal of Finance, Forthcoming; AFA 2007 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=891418

Dalida Kadyrzhanova (Contact Author)

Georgia State University ( email )

J Mack Robinson College of Business
35 Broad St, 12th Floor
Atlanta, GA 30303-3083
United States

Matthew Rhodes-Kropf

Harvard Business School - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Rock Center 312
Boston, MA 02163
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
567
Abstract Views
3,442
rank
47,305
PlumX Metrics