The impact of the EU takeover directive on takeover performance and empire building

Humphery‐Jenner, Mark

doi:10.1016/j.jcorpfin.2011.12.004

Cited by 63 publications

(30 citation statements)

References 69 publications

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“…Hence, given the interdependence among MEPs, other governance provisions, and resource-allocation decisions, some authors suggest the need to adopt a contingency approach to examine the conditions under which MEPs enhance firm value (Sundaramurthy, 2000). In contrast to LMEs, hostile takeovers are seen by CMEs' national governments as a threat to the coordinated, stakeholder-centered logic and, for this reason, takeovers have been largely discouraged by national institutions (Goergen, Martynova, & Renneboog, 2005;Humphery-Jenner, 2012;Schneper & Guillén, 2004). Even though institutions curtail the threat of takeovers, many leading corporations in CMEs complement such institutional protections by adopting additional firm-level governance provisions (Goergen et al, 2005;Humphery-Jenner, 2012).…”

Section: Varieties Of Capitalism and Managerial Entrenchment Provismentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

“…In contrast to LMEs, hostile takeovers are seen by CMEs’ national governments as a threat to the coordinated, stakeholder‐centered logic and, for this reason, takeovers have been largely discouraged by national institutions (Goergen, Martynova, & Renneboog, ; Humphery‐Jenner, ; Schneper & Guillén, ). Even though institutions curtail the threat of takeovers, many leading corporations in CMEs complement such institutional protections by adopting additional firm‐level governance provisions (Goergen et al, ; Humphery‐Jenner, ). Such adoption of MEPs requires the approval of the company's board, which typically represents the blockholders’ interests (Goergen et al, ), so any escalation in entrenchment might be interpreted as a strategy of managers and blockholders to reinforce their insider power in the firm and potentially pursue their private benefits at the expense of the company's overall financial performance.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value

Surroca

Aguilera

Desender

et al. 2020

Strategic Management Journal

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Research summary Building on the comparative capitalism's notion of institutional complementarities, we examine whether firms’ simultaneous adoption of managerial entrenchment provisions (MEPs) and corporate social responsibility (CSR) reinforces or undercuts one another in influencing firm financial performance. We propose that the financial impact of such configurations is contingent on the country's institutional setting. In Liberal Market Economies (LMEs), where firms face strong pressures to achieve short‐term goals, the combination of MEPs and CSR creates shareholder value, particularly when firms engage in internally oriented CSR projects. Conversely, in Coordinated Market Economies (CMEs), where institutions already curb short‐term demands, the combined adoption of MEPs and CSR initiatives destroys shareholder value, particularly when this CSR is external. Overall, our study enhances understanding of the institutional complementarity between corporate governance and CSR. Managerial summary This study examines how two organizational practices, managerial entrenchment provisions (MEPs), and corporate social responsibility (CSR), combine between them to improve or reduce firms’ financial success. Our analysis demonstrates that institutional framework has a strong influence on their combined effect. When the institutional context supports solutions to coordination problems among economic agents through market‐based arrangements, MEPs allow the implementation of strategies directed to promote long‐term investments and relationships. In this case, MEPs when paired with CSR allow generating intangibles that contribute to create shareholder value. Contrarily, in frameworks with coordination mechanisms based on nonmarket arrangements, the joint adoption of MEPs and CSR destroys value by increasing the power of managers and blockholders to extract rents at the expense of firms’ minority shareholders.

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Section: Varieties Of Capitalism and Managerial Entrenchment Provismentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value

Surroca

Aguilera

Desender

et al. 2020

Strategic Management Journal

View full text Add to dashboard Cite

show abstract

“…This new framework organizes a common acquisition regulation among the seven European countries in our sample. This may limit shareholder disputes (Humphery‐Jenner, ). Another change that was adopted the same year but enforced in 2005 is the mandatory use of IFRS financial standards for EU‐listed firms.…”

Section: Determinants Of Litigation Risk and Of The Terms Of The Acqumentioning

confidence: 99%

Litigation risk: Measurement and impact on M&A transaction terms

Bruslerie

Maux

2018

Business Fin & Account

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The purpose of the paper is to propose an original proprietary proxy of a firm's litigation risk. We extend the scope of litigation risk outside of the conflicts with shareholders and the domain of security litigation. We demonstrate that the source of the risk of litigation can be found in the firm's policies and in its management's operational or strategic decisions, even if a sector conditioning effect exists. Based on a sample of 465 US M&A transactions between 2000 and 2014, we provide evidence that the level of litigation risk, at the acquirer's level, has a positive and significant impact on the takeover premium. We also provide evidence that a significant relationship exists between the acquirer's litigation risk and the means of payment. An extension of the sample to international transactions is used as a robustness check; it confirms the previous results.

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“…The coefficient on the ETD variable is negative but not significant. This is surprising, because some literature suggests a negative effect from implementation of the ETD on shareholder value Humphery-Jenner, 2012). 6 However, Dissanaike et al (2016) and Wang and Lahr (2017) document that improvements in legal regulations (i.e., the ETD) influence bidder shareholder value positively.…”

Section: Bidder Value Creation In the Uk And Cementioning

confidence: 99%

Do investment banks create value for their clients? Empirical evidence from European acquisitions

Kolb

2017

Euro Fin Management

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Europe provides an interesting setting to explore the role that investment banks play in acquisitions because it is composed of countries with different legal regimes – the shareholder‐oriented common law regime in the UK/Ireland and the stakeholder‐oriented civil law regime in Continental Europe. Since investment banks are hired to act in the interests of shareholders, and due to differences in disclosure requirements, market transparency, accounting standards, and ownership between the UK and Continental Europe, I argue that investment banks are relatively more important in UK‐only acquisitions. My findings support this conjecture.

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The impact of the EU takeover directive on takeover performance and empire building

Cited by 63 publications

References 69 publications

Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value

Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value

Litigation risk: Measurement and impact on M&A transaction terms

Do investment banks create value for their clients? Empirical evidence from European acquisitions

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