Corporate Governance and the Spinoff Decision

Ahn, Seoungpil; Walker, Mark D.

doi:10.2139/ssrn.634521

Cited by 33 publications

(52 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In particular, diversification is positively related to managerial incentives, after controlling for firm-specific factors that influence diversification decisions. Ahn and Walker (2007) find that firms with more effective corporate governance are more likely to engage in spinoffs and become more focused.…”

Section: Literature Reviewmentioning

confidence: 90%

Industrial diversification, partial privatization and firm valuation: Evidence from publicly listed firms in China

Lin¹,

2008

Journal of Corporate Finance

101

View full text Add to dashboard Cite

This paper investigates the relationship between industrial diversification and firm valuation in a sample of 816 publicly listed firms in China. It contributes to the literature in three ways. First, it is one of the first studies of diversification and firm value in an emerging market dominated by partially privatized firms. Second, it explores the determinants of corporate diversification by considering some unique aspects of the agency and political conflicts inherent in China's transition toward a market economy. Third, it employs a number of empirical methodologies (instrumental variables estimation, the Heckman self-selection model, and propensity score matching) to examine the relationship between diversification and firm value. The paper finds that when the decision to diversify is modeled as an endogenous choice based on firm characteristics, multi-segment firms have significantly higher Tobin's q than single-segment firms, even after controlling for factors such as ownership structure, ownership concentration, and growth opportunities. In addition, government-controlled multi-segment firms have lower Tobin's q than non-government-controlled multi-segment firms, providing evidence in support of the political cost hypothesis of diversification. Moreover, non-government-controlled firms in growth industries that perform better are more likely to diversify. Overall, our results illustrate that the valuation effect of diversification depends on government control.

show abstract

Section: Literature Reviewmentioning

confidence: 90%

Industrial diversification, partial privatization and firm valuation: Evidence from publicly listed firms in China

Lin¹,

2008

Journal of Corporate Finance

101

View full text Add to dashboard Cite

show abstract

“…Many studies provide evidence that investment decisions of firms can be positively influenced by the level of CEO ownership (Lewellen et al, 1985(Lewellen et al, , 1989Agrawal and Mandelker, 1987;Morck et al, 1988;Hoechle et al, 2011). However, compensation may also reflect the CEO's bargaining power to extract more private benefits from the board and thus could be a signal of entrenchment (Ahn and Walker, 2007). Harford and Li (2007) document that CEO compensation schemes are not effective in controlling agency conflicts.…”

Section: Outside Director Ownershipmentioning

confidence: 99%

Corporate governance and capital allocations of diversified firms

Chen

2012

Journal of Banking & Finance

View full text Add to dashboard Cite

“…Some studies have focused on how governance shapes the actions of the CEO and top managers. For example, company ownership and boardroom structures, which represent a firm's governance style, have been used to help explain management's actions on corporate restructuring (e.g., Denis et al, 1997;Ahn and Walker, 2007;Netter et al, 2009;Bauguess et al, 2009), dividend decisions (Brav et al, 2005), and the pricing of executive stock options (Chidambaran and Prabhala, 2003). Other examples include how governance has constrained managers' opportunistic uses of discretionary accruals in a firm's financial statements (Chung et al, 2002;Park and Shin, 2004), inter-group borrowings (Berkman et al, 2009), and corporate fraud (Chen et al, 2006).…”

Section: Introductionmentioning

confidence: 99%