How powerful CEOs adopt antitakeover provisions?

Lee, Eunsuh; Kim, Chaehyun; Lee, Junyoup

doi:10.1080/13504851.2021.1897510

Cited by 2 publications

(7 citation statements)

References 11 publications

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“…Although previous studies also use CEO pay slice as an alternative measure to capture CEO power (Baker et al. , 2019; Lee et al. , 2022), we are unable to replicate this same proxy in the Brazilian setting.…”

Section: Resultsmentioning

confidence: 70%

Section: Resultsmentioning

confidence: 99%

Section: Resultsmentioning

confidence: 99%

“…On the one hand, under the managerial entrenchment view, powerful CEOs can exercise more control over corporate policies, facilitating the adoption of anti-takeover provisions, such as poison pills, to strengthen their job security and obtain private benefits (Lee et al, 2022). This view is supported by previous evidence that CEOs are usually dismissed shortly after successful takeovers (Harris, 1990;Mallette and Fowler, 1992).…”

Section: Spcr and The Adoption Of Poison Pillsmentioning

confidence: 93%

“…On the other hand, under the quiet life view, the adoption of anti-takeover mechanisms can be costly for CEOs because it requires extra effort, which interrupts their quiet lives (Lee et al, 2022). Previous literature supports this notion by documenting that entrenched managers undermine shareholder wealth, reduce earnings quality and increase leverage levels.…”

Section: Spcr and The Adoption Of Poison Pillsmentioning

confidence: 99%

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Stock price crash risk and the adoption of poison pills: evidence from Brazil

Azevedo

Schwarz²,

Dias³

et al. 2022

IJMF

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PurposeThe purpose of this paper is to examine the effect of stock price crash risk on the adoption of poison pills.Design/methodology/approachThe authors estimate logit and probit regressions. Their sample includes 185 Brazilian public firms for the period 2010–2018. Following previous studies, the authors use the negative skewness of firm-specific weekly returns and the down-to-up volatility of firm-specific weekly returns as measures of firm's stock price crash risk. As proxies of poison pills, the authors employ the “conventional” poison pills in their baseline models and the “eternity” poison pills, which prevent the removal of poison pills from bylaws, in additional models.FindingsThe authors find that stock price crash risk measures are not associated with poison pill adoption. However, although stock price crash risk does not lead to poison pill adoption as a complementary corporate governance mechanism that protects firms against hostile takeover attempts, further results show that managers do not draw on stock price crash risk as a pretext to entrench themselves. Additional analyses also highlight that CEO power seems to play a role in moderating the relationship between stock price crash risk and eternity poison pill adoption.Originality/valueThe authors contribute to the literature on stock price crash risk, which calls for research in international contexts to better understand the effect of stock price crash risk on country-specific idiosyncratic features. The authors discuss a controversial anti-takeover mechanism that has been debated by Brazilian policymakers.

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Section: Resultsmentioning

confidence: 70%

Section: Resultsmentioning

confidence: 99%

Section: Resultsmentioning

confidence: 99%

Section: Spcr and The Adoption Of Poison Pillsmentioning

confidence: 93%

Section: Spcr and The Adoption Of Poison Pillsmentioning

confidence: 99%

See 3 more Smart Citations

Stock price crash risk and the adoption of poison pills: evidence from Brazil

Azevedo

Schwarz²,

Dias³

et al. 2022

IJMF

View full text Add to dashboard Cite

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Revisiting the Quiet-Life Hypothesis in the Banking Sector: Do CEOs’ Personalities Matter?

Le,

Nguyen,

Ngo

2024

IJFS

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This study investigates the relationship between market power and bank profitability, and the impacts of CEOs’ personality traits, in Vietnam from 2007 to 2020. The analysis of CEOs’ signatures is used to determine their characteristics. The findings support the quiet-life hypothesis, which suggests that the negative relationship between market power and bank profitability may depend on CEOs’ characteristics. More specifically, the results show that conscientious CEOs with market power tend to reduce bank profitability, and this effect is more pronounced for foreign-owned banks. Therefore, our findings have critical implications for bank management.

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How powerful CEOs adopt antitakeover provisions?

Cited by 2 publications

References 11 publications

Stock price crash risk and the adoption of poison pills: evidence from Brazil

Stock price crash risk and the adoption of poison pills: evidence from Brazil

Revisiting the Quiet-Life Hypothesis in the Banking Sector: Do CEOs’ Personalities Matter?

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