Do exogenous changes in passive institutional ownership affect corporate governance and firm value?
We investigate whether corporations and their executives react to an exogenous change in passive institutional ownership and alter their corporate governance structure. We find that exogenous increases in passive ownership lead to increases in CEO power and fewer new independent director appointment...
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| Veröffentlicht in: | Journal of financial economics 2017-05, Vol.124 (2), p.285-306 |
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| container_end_page | 306 |
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| container_issue | 2 |
| container_start_page | 285 |
| container_title | Journal of financial economics |
| container_volume | 124 |
| creator | Schmidt, Cornelius Fahlenbrach, Rüdiger |
| description | We investigate whether corporations and their executives react to an exogenous change in passive institutional ownership and alter their corporate governance structure. We find that exogenous increases in passive ownership lead to increases in CEO power and fewer new independent director appointments. Consistent with these changes not being beneficial for shareholders, we observe negative announcement returns to the appointments of new independent directors. We also show that firms carry out worse mergers and acquisitions after exogenous increases in passive ownership. These results suggest that the changed ownership structure causes higher agency costs. |
| doi_str_mv | 10.1016/j.jfineco.2017.01.005 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2017-05, Vol.124 (2), p.285-306 |
| issn | 0304-405X 1879-2774 |
| language | eng |
| recordid | cdi_proquest_journals_1903485418 |
| source | Elsevier ScienceDirect Journals |
| subjects | Acquisitions & mergers Appointments & personnel changes Business ownership Business valuation Change agents Chief executive officers Corporate governance Exogenous increases Index reconstitutions Institutional ownership Mergers Monitoring Outside directors Ownership Power Stockholders |
| title | Do exogenous changes in passive institutional ownership affect corporate governance and firm value? |
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