Managerial Entrenchment and Firm Value: A Dynamic Perspective

Chang, Xin; Zhang, Hong Feng

doi:10.1017/s0022109015000423

Cited by 46 publications

(37 citation statements)

References 32 publications

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“…First, we contribute to the literature on the level of employee relations beyond the corporate social responsibility (CSR) literature, by providing empirical support of legal allegations, direct and indirect costs of lawsuits, and case characteristics. Second, previous literature documents how antitakeover provisions influence firm value (Chang and Zhang 2015;Gompers et al 2003); this study shows how channels do so.…”

Section: Introductionmentioning

confidence: 80%

Correction to: Corporate governance and employee treatment: Evidence from takeover defenses

Unsal

Rayfield

2019

J Econ Finan

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This study investigates if antitakeover provisions are a value-enhancing indicator of corporate governance by estimating the effect of takeover susceptibility to labor litigations. Using a unique hand-collected dataset of employee lawsuits, we find a positive relationship between employee litigation and takeover protection. We document that employee lawsuits increase a firm's susceptibility to a hostile takeover. In addition, we document that higher costs of litigation, measured by fees and case duration, increase the firms' suitability to takeover. Our results indicate that takeover protections may decrease corporate attention to employees. This effect may be because entrenched managers may avoid long-term investment in stakeholders and enjoy "the quiet life" following the reduced threat of a hostile takeover.

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Section: Introductionmentioning

confidence: 80%

Correction to: Corporate governance and employee treatment: Evidence from takeover defenses

Unsal

Rayfield

2019

J Econ Finan

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“…We perform a Granger causality test to ascertain the direction of causality. We follow recent research (Grinstein and Michaely 2005;Chang and Zhang 2015) and employ the panel vector autoregression methodology developed by Holtz-Eakin, Whitney, and Harvey (1988). The model we estimate for the full sample is given in equations (3) and (4) with firm fixed effects.…”

Section: Robustness and Endogeneity Testsmentioning

confidence: 99%

DO WELL‐CONNECTED BOARDS INVEST OPTIMALLY IN R&D ACTIVITIES?

Iyer¹,

Sankaran

Zhang

2020

J of Financial Research

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Researchers have argued that the uncertainty surrounding innovative activities causes firms to either underinvest or overinvest in research and development (R&D). We examine whether the information gained by boards through directors’ connections helps mitigate such distortions. We find that an increase in directors’ connections has an asymmetric impact on under‐ and overinvesting firms. R&D expenditures are shown to increase with board connections. Such increases in R&D intensity exacerbate the extent of overinvestment, resulting in a loss in future market‐to‐book value. The increase in R&D intensity, however, reduces underinvestment only among firms with higher than average R&D productivity. We find that increased director busyness is one cause of overinvestment.

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“…Career entrenchment can occur in all types of professions and be bidirectional. However, although the organization affects individual's entrenchment, career entrenchment may affect overall the organization and its value in the market (Chang & Zhang, 2015). Particularly in senior positions, when managers are members of the founder's family and are automatically promoted, the fact that they are not recruited in the external labour market hinders their resignation or voluntary departure (Cao, Pan, Qian, & Tian, 2016).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Career profiles: Career entrenchment or adaptation to change?

Oliveira

Lopes

Gonçalves

2020

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The rapid development of societies and the transformation of labour markets and organizationsrequires more dynamic careers nowadays. Thus, based on the career profiles described by Carson,Carson, Phillips and Roe (1996) and the association of career entrenchment and career satisfaction,we identified in this study, which career profiles currently exist. The cross-reference of data, withorganizational commitment, career commitment and turnover intention, allowed to characterize eachprofile and the factors that weigh on the decision to stay or change career, keeping or not a positiveattitude. We perform a cluster analysis using the K-means method, in a sample of 386 subjects. Theresults came across a new career profile, called transactional career, which might reflect that careersare currently more active and less stable. In the end, the results and the theoretical and practicalimplications are being discussed.

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Managerial Entrenchment and Firm Value: A Dynamic Perspective

Cited by 46 publications

References 32 publications

Correction to: Corporate governance and employee treatment: Evidence from takeover defenses

Correction to: Corporate governance and employee treatment: Evidence from takeover defenses

DO WELL‐CONNECTED BOARDS INVEST OPTIMALLY IN R&D ACTIVITIES?

Career profiles: Career entrenchment or adaptation to change?

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