Block Share Purchases and Corporate Performance

Bethel, Jennifer E.; Liebeskind, Julia Porter; Opler, Tim C.

doi:10.1111/0022-1082.244195

Cited by 396 publications

(312 citation statements)

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“…For example, Bethel, Liebeskind, and Opler (1998) find that company performance improves after an activist investor purchases a block of shares. In addition, Kang and Shivdasani (1995), and Kaplan and Minton (1994) have found that the presence of large shareholders in a firm is associated with management turnover, suggesting that these shareholders provide a monitoring function.…”

mentioning

confidence: 99%

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Gillan¹,

Starks²

2003

Ownership and Governance of Enterprises

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We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.We then examine differences in ownership structures around the world and the implications of the interactions of these ownership structures for institutional investor involvement in corporate governance. Although there may be some convergence in corporate governance systems across countries, because of the endogenous nature of the interrelation among the factors of corporate governance the evolution will most likely .../…

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confidence: 99%

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Gillan¹,

Starks²

2003

Ownership and Governance of Enterprises

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“…2 Unlike Bethel, Liebeskind and Opler (1998), they find that firms with private equity placements have relatively high market-to-book ratios, as well as high capital expenditures prior to the private placement.…”

Section: Introductionmentioning

confidence: 73%

“…As a comparison, we also perform the same set of analyses on 2 A "private equity placement" describes a company's cash sale of its securities made in reliance upon exemptions from registration requirements contained in the applicable securities legislation. Private placement investments often are limited to institutional investors, accredited/sophisticated investors, hedge funds, venture capitalists, and corporate insiders.…”

Section: Introductionmentioning

confidence: 99%

The Long-Run Performance of Sponsored and Conventional Spin-Offs

Klein

Rosenfeld

2008

SSRN Journal

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Unlike a conventional spin-off, a sponsored spin-off takes place when the subsidiary to be divested sells an equity stake to an outside investor before going public, thereby receiving a substantial capital infusion. We find that the stock return performance of a sample of 57 sponsored spin-offs from 1994 through 2005 is significantly negative over a three-year period following the spin-off date. In contrast, 182 conventional spin-offs over same interval record an average return performance. The parent firms' stock performance for the year preceding (following) the spin-off date is below-average (average), suggesting that their earlier performance was adversely affected by the subsidiary and motivated the parent to spin it off. In support of this contention, we find that parent firms tended to under-invest in the subsidiary prior to the spin-off, due to the subsidiary's limited growth opportunities. This under-investment, in turn, could have motivated the subsidiary to seek outside funding sources before going public.

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“…Shareholder activism can take many forms. These include binding and non-binding (or precatory) shareholder proposals, quiet negotiations to obtain governance or other changes, and campaigns to withhold votes or vote against directors (Kahan and Rock, 2006;Bethel et al, 1998;Becht et al, 2006;O'Rourke, 2003;Rehbein, Waddock and Graves, 2004). One of the most popular tools of shareholder activists are proxy fights.…”

Section: Causes and Forms Of Shareholder Activismmentioning

confidence: 99%

“…In the finance and management literature, the pursuit of shareholder value is assumed to be the main driver of shareholder activism (Del Guercio and Hawkins, 1999;Ryan and Schneider, 2002;Bethel et al, 1998;Becht et al, 2006;Brav et al, 2008). In their 1996 study, Karpoff, Malatesta and Walkling identified three primary categories of issues that were the subjects of shareholder proposals:…”

Section: Causes and Forms Of Shareholder Activismmentioning

confidence: 99%

A Good Reputation: Protection against Shareholder Activism

Hoffmann

Brønn

Fieseler

2016

Corp Reputation Rev

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Abstract:When shareholders become dissatisfied with a public company's policies or actions, they may resort to activist interventions. Shareholder activism has been described as an attempt to resolve agency conflicts by directly influencing management or board decisions. Shareholder activism may be incited by a lack of focus on shareholder value, a misalignment of corporate governance, or a number of social and environmental policy issues. Over recent years, shareholder activism has become more frequent, professional, and costly to corporations. Large, visible companies are held to be most susceptible to activist interventions, potentially damaging their corporation reputation. In this study, we analyze the effect of a good corporate reputation on the susceptibility of public companies to shareholder interventions in the form of proxy fights. We consider both the frequency and success of shareholder proposals and differentiate the effect of corporate reputation by issues context. Our findings indicate that a good corporate reputation serves as a two-fold inoculation against shareholder interventions, reducing both the frequency and success of proxy fights.

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Block Share Purchases and Corporate Performance

Cited by 396 publications

References 50 publications

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

The Long-Run Performance of Sponsored and Conventional Spin-Offs

A Good Reputation: Protection against Shareholder Activism

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