Managerial and shareholder activism
Başlık çevirisi mevcut değil.
- Tez No: 403035
- Danışmanlar: PROF. ŞENAY AĞCA
- Tez Türü: Doktora
- Konular: Maliye, Finance
- Anahtar Kelimeler: Belirtilmemiş.
- Yıl: 2017
- Dil: İngilizce
- Üniversite: The George Washington University
- Enstitü: Yurtdışı Enstitü
- Ana Bilim Dalı: Belirtilmemiş.
- Bilim Dalı: Belirtilmemiş.
- Sayfa Sayısı: 222
Özet
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Özet (Çeviri)
Agency costs, as a result of separation of ownership and control, have received vast attention in the literature. One important aspect of this separation is that shareholders do not have direct control over the decisions of managers. Dissatisfied groups may exert 'voice' to influence the decisions of the others within a company. In my dissertation, I analyze different aspects of `voice' with respect to agency problems within firms. Chapter 1“Managerial Activism”examines the effect of managerial voice, i.e., managerial activism in the corporate sector by identifying a unique organization, Business Roundtable (BRT, henceforth), that consists of high profile CEOs within the U.S. that focuses on managerial activism through collective action. Specifically, I look at a number of empirical questions. First, I look at whether these managers use managerial activism, through this lobbying platform, to implement pro-manager policies or pro-business policies. Using a balanced sample of these managerially active firms and their matched peers, I observe that managers that involve in activism through collective action are more powerful and are paid more compared their peers but these firms also have more independent directors on their boards. Firms with activist managers are also less likely to face proxy fights from shareholders or hostile shareholder activism even though they are exposed to activism more intensely than other firms. I do not however find evidence that these firms perform poorly. Operating performance of firms with activist managers is similar to their peers. Thus, even though there is evidence that firms with activist managers have more powerful CEOs who are paid more and face hostile shareholder pressures, they perform at par with their peers. Next, I look at whether managerial activism has any defensive effect when firms are faced with activist shareholders. I observe that even though firms engaged in managerial activism face shareholder activism more intensely than comparable firms, shareholder campaigns involve relatively less proxy fights and hostile tactics from activist shareholders. This lets me conclude that activist shareholders avoid tension while targeting firms with activist managers and that activist managers and activist shareholders are able to resolve issues without resorting to hostile tactics. This chapter also looks at the conflicts between shareholders and bondholders in firms with activist managers, especially when there is tension between shareholders and managers. To explore this issue, I look at stock market reaction to shareholder activism events. I observe that shareholder activism campaigns is considered to be increasing firm value in firms with activist managers only if these campaigns are not hostile. This result indicates that shareholders consider friendly shareholder activism campaigns as value increasing but do not find any value added in campaigns that are hostile to management. I look at the reaction in the credit market using Credit Default Swaps (CDS). Creditors respond to shareholder activism adversely but more so in non-managerially active firms, consistent with the notion that creditors consider managerial activism useful in mitigating wealth transfer from creditors to shareholders. I next conduct a natural experiment using an exogeneous court decision that resulted in an unexpected win by BRT members and observe market reaction to this decision. I find that shareholders consider the success of managerial activism as value decreasing in firms with activist managers. Looking at the credit market reaction, I see that the creditors of BRT firms and non BRT firms observe a decline in CDS spreads around the event date which suggests managerial activism success is considered to be comforting to creditors as the transfer of wealth to shareholders is less likely to happen. Finally, I consider the relationship between managerial activism and corporate social responsibility and observe that the socially responsible practices of BRT firms are generally comparable to their peers. Overall, Chapter 1 looks at the implications of managerial activism for the firm by focusing on corporate governance, firm performance and shareholder activism aspects. The findings in the chapter suggest that, although activist managers are more powerful and are paid more, firms with activist managers have more independent directors on their board, performing at par with their peers and face relatively less hostile shareholder pressures. Chapter 2“Institutional Investment Horizon and Hedge Fund Activism”contributes to the debate of shareholder 'voice' by hedge fund activists by identifying investment horizon of other institutional investors as an important factor in explaining hedge fund activism. The chapter first considers the probability of a firm being targeted by hedge funds and identifies that this probability is strongly related to the investment horizon of its institutional investors, confirming the argument that hedge funds want to minimize free-riding and work with sophisticated institutional investors that have long-term investment horizons if their own goals are long-term. This result holds even after controlling for stock liquidity, which is related to investment turnover. Second, I analyze campaign types demanded by hedge funds in relation to investment horizon. I find that hedge funds' activist campaigns vary with the investment horizon of the institutional investors. Campaign types that are related to increasing firm value or improved corporate governance are more likely to be seen in firms that have institutional investors with long-term investment horizons. On the other hand, firms with short-term investors are less likely to face campaigns related to corporate governance related requests or removing directors. I also look at whether blockholders of target firms change their holdings or exit based on the campaign type around activism events. I observe that blockholders are more likely to sell their holdings post activism in firms where institutional shareholders have long-term investment horizons most likely as a result of disagreement with the hedge funds. However, they are likely to side with activists when the campaign is for long-term value improvement. Finally, I look at outcomes of hedge fund activism by examining firm performance, CEO characteristics, corporate governance characteristics, capital structure changes, spinoffs and divestitures. I observe that firms with institutional investors that have short-term investment horizons are likely to see no change in performance post activism that are targeted by hedge funds do not see a change in operating performance (or minimal improvement) compared to their peers three years post activism. Similarly, CEO incentives are more likely to increase and the spinoffs are more frequent for these firms. Also, targeted firms with institutional investors that have short-term investment horizons are more likely to be delisted. On the other hand firms with investors that have long-term investment horizons see a significant amount of improvement in operating performance post activism. Overall, Chapter 2 examines a vital player in the corporate world and shareholder activism – institutional investors, by focusing on their investment horizon. This chapter shows that investment horizon of institutions has considerable effect on the probability of being targeted by hedge funds, the campaign types followed by hedge funds, as well as long-term value created when hedge fund activists are involved in a firm's decision making process. Taken as a whole, the first essay demonstrates that managerial activism plays an important role in balancing out shareholder pressures that arise from shareholder activism. Even though activist managers are more powerful and paid more, they also balance out hostile shareholder pressures and do not destroy firm value. The second essay shows a key channel - investment horizon, which has significant impact on how hedge funds target and conduct business with corporations. The findings suggest hedge fund activism differs by the investment horizon of firms' institutional investors. Overall, both managerial activism and investment horizon of major investors are crucial factors in understanding the dynamics among important players in corporate finance.
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