The Experts below are selected from a list of 306 Experts worldwide ranked by ideXlab platform
Yuan Zhang - One of the best experts on this subject based on the ideXlab platform.
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the economic consequences of financial restatements evidence from the market for Corporate Control
The Accounting Review, 2015Co-Authors: Amir Amelzadeh, Yuan ZhangAbstract:ABSTRACT: This paper investigates whether and how financial restatements affect the market for Corporate Control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for Corporate Control. JEL Classifications: D82; G14; G34; M41. Data Availability: Data are available from sources identified in the paper.
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the economic consequences of financial restatements evidence from the market for Corporate Control
Social Science Research Network, 2014Co-Authors: Amir Amelzadeh, Yuan ZhangAbstract:This paper investigates whether and how financial restatements affect the market for Corporate Control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score-matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for Corporate Control.
Ernstludwig Von Thadden - One of the best experts on this subject based on the ideXlab platform.
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the political economy of Corporate Control and labor rents
Journal of Political Economy, 2006Co-Authors: Enrico C Perotti, Ernstludwig Von ThaddenAbstract:In a democracy, a political majority can influence both the Corporate governance structure and the return to human and financial capital. We argue that when financial wealth is sufficiently concentrated, there is political support for high labor rents and a strong governance role for banks or large investors. The model is consistent with the “great reversal” phenomenon in the first half of the twentieth century. We offer evidence that in several financially developed countries a financially weakened middle class became concerned about labor income risk associated with free markets and supported a more corporatist financial system.
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the political economy of Corporate Control and labor rents
Social Science Research Network, 2005Co-Authors: Enrico C Perotti, Ernstludwig Von ThaddenAbstract:In a democracy, a political majority can influence both the Corporate governance structure and the return to human and financial capital. We argue that when financial wealth is sufficiently concentrated, there is political support for high labor rents and a strong governance role for banks or large investors. The model is consistent with the "great reversal" phenomenon in the first half of the twentieth century. We offer evidence that in several financially developed countries a financially weakened middle class became concerned about labor income risk associated with free markets and supported a more corporatist financial system. We offer suggestive evidence using post WW1 inflationary shocks as the source of identifying exogenous variation.
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blocks liquidity and Corporate Control
Journal of Finance, 1998Co-Authors: Patrick Bolton, Ernstludwig Von ThaddenAbstract:The paper develops a simple model of Corporate ownership structure in which costs and benefits of ownership concentration are analyzed. The model cornpares the liquidity benefits obtained through dispersed Corporate ownership with the benefits from efficient management Control achieved by some degree of ownership concentration. The paper reexamines the free-rider problem in Corporate Control in the presence of liquidity trading, derives predictions for the trade and pricing of blocks, and provides criteria for the optimal choice of ownership structure. THE RECENT INCOMPLETE CONTRACTING approach in Corporate finance has considerably improved our understanding of how small firms determine their capital structure. The basic setting considered in this line of research is one where a founder-manager seeks funding from one or several financiers. The main premise is that the founder-manager, in her dealings with the financiers, is primarily concerned with maintaining her private benefits of Control. For small firms these are often quite large relative to the financial returns. Thus, for a small firm the problem of determining the financial structure often reduces to the problem of how to obtain fundingr while giving away as little Control as possible to the financiers. Of course, most financiers insist on some form of protection, so that the final compromise reached in most financial contracts for small firms is one resembling a debt contract (or a venture capital contract), which protects the founder-manager's Control as long as the firm is performing adequately.' This perspective for small firms does not extend naturally to large firms because the private benefits of Control of the managers for large firms are likely to be small relative to the firm's monetary returns, so that protection of these benefits is not an overriding consideration. Moreover, large firms
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blocks liquidity and Corporate Control
Research Papers in Economics, 1996Co-Authors: Patrick Bolton, Ernstludwig Von ThaddenAbstract:The paper develops a simple model of optimal Corporate ownership structure in which costs and benefits of ownership concentration are analysed.
Amir Amelzadeh - One of the best experts on this subject based on the ideXlab platform.
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the economic consequences of financial restatements evidence from the market for Corporate Control
The Accounting Review, 2015Co-Authors: Amir Amelzadeh, Yuan ZhangAbstract:ABSTRACT: This paper investigates whether and how financial restatements affect the market for Corporate Control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for Corporate Control. JEL Classifications: D82; G14; G34; M41. Data Availability: Data are available from sources identified in the paper.
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the economic consequences of financial restatements evidence from the market for Corporate Control
Social Science Research Network, 2014Co-Authors: Amir Amelzadeh, Yuan ZhangAbstract:This paper investigates whether and how financial restatements affect the market for Corporate Control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score-matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for Corporate Control.
Ronald J Gilson - One of the best experts on this subject based on the ideXlab platform.
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Corporate Control and credible commitment
International Review of Law and Economics, 2015Co-Authors: Ronald J Gilson, Alan SchwartzAbstract:Abstract The separation of Control and ownership – the ability of a small group effectively to Control a company though holding a minority of its cash flow rights – is common throughout the world, but also is commonly decried. The Control group, it is thought, will use its position to consume excessive amounts of the firm's returns, and this injures minority shareholders in two ways: there is less money and the Controllers are not maximizing firm value. To the contrary, we argue here that there is an optimal share of the firm that induces the Control group to maximize shareholder value while inducing investors to fund the firm's projects. The concern that Controlled companies raise is that the Controlling group cannot easily commit not to consume more than the optimal share. A firm's cost of capital is increasing in the Controllers’ inability to solve this credibility problem because potential investors will charge the firm for later consuming private benefits. Today, accurate judicial review of Controlled transactions under mandatory fiduciary rules helps Controllers to commit not to take more than the optimal share. Private contracting and judicial review are strong complements, however. Therefore, our principal normative recommendation is to open up the contracting space by reducing the fiduciary rules to defaults. This reform would be less helpful in developing countries that lack effective legal systems. The public corporations in such countries, however, also have Controlling shareholders. We explore various non-legal methods by which these shareholders credibly commit to cap private benefits, although we also show that these methods are less efficient in a mature legal system than contracting would be.
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Corporate Control and credible commitment
Social Science Research Network, 2014Co-Authors: Ronald J Gilson, Alan SchwartzAbstract:The separation of Control and ownership – the ability of a small group effectively to Control a company though holding a minority of its cash flow rights – is common throughout the world, but also is commonly decried. The Control group, it is thought, will use its position to consume excessive amounts of project returns, and this injures minority shareholders in two ways: there is less money and the Controllers are not maximizing firm value. To the contrary, we argue here that there is an optimal share of the firm that compensates the Control group for monitoring managers and otherwise exerting effort to implement projects while inducing investors to fund the firm’s projects. This result assumes that a Controlling group can credibly commit not to consume more than its efficient share of firm cash flow. When potential entrepreneurs cannot solve this credibility problem, some ex ante efficient firms fail to form because their potential principals cannot raise money at a price that does not reflect inefficient levels of private benefits of Control. The ability of Controllers to commit is increasing in the accuracy of judicial review of Controlled transactions. Private contracting, we argue, would materially improve judicial accuracy. Our principal normative recommendation therefore is to demote Corporate fiduciary law from mandatory to a set of defaults. Many developing countries, however, lack an effective legal system, but their public corporations nonetheless commonly have a Controlling shareholder and minority shareholders. We explore various non-legal methods by which this shareholder credibly commits to a cap on private benefits of Control, although we also show that these methods are less efficient than contracting in a mature legal system would be.
Alan Schwartz - One of the best experts on this subject based on the ideXlab platform.
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Corporate Control and credible commitment
International Review of Law and Economics, 2015Co-Authors: Ronald J Gilson, Alan SchwartzAbstract:Abstract The separation of Control and ownership – the ability of a small group effectively to Control a company though holding a minority of its cash flow rights – is common throughout the world, but also is commonly decried. The Control group, it is thought, will use its position to consume excessive amounts of the firm's returns, and this injures minority shareholders in two ways: there is less money and the Controllers are not maximizing firm value. To the contrary, we argue here that there is an optimal share of the firm that induces the Control group to maximize shareholder value while inducing investors to fund the firm's projects. The concern that Controlled companies raise is that the Controlling group cannot easily commit not to consume more than the optimal share. A firm's cost of capital is increasing in the Controllers’ inability to solve this credibility problem because potential investors will charge the firm for later consuming private benefits. Today, accurate judicial review of Controlled transactions under mandatory fiduciary rules helps Controllers to commit not to take more than the optimal share. Private contracting and judicial review are strong complements, however. Therefore, our principal normative recommendation is to open up the contracting space by reducing the fiduciary rules to defaults. This reform would be less helpful in developing countries that lack effective legal systems. The public corporations in such countries, however, also have Controlling shareholders. We explore various non-legal methods by which these shareholders credibly commit to cap private benefits, although we also show that these methods are less efficient in a mature legal system than contracting would be.
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Corporate Control and credible commitment
Social Science Research Network, 2014Co-Authors: Ronald J Gilson, Alan SchwartzAbstract:The separation of Control and ownership – the ability of a small group effectively to Control a company though holding a minority of its cash flow rights – is common throughout the world, but also is commonly decried. The Control group, it is thought, will use its position to consume excessive amounts of project returns, and this injures minority shareholders in two ways: there is less money and the Controllers are not maximizing firm value. To the contrary, we argue here that there is an optimal share of the firm that compensates the Control group for monitoring managers and otherwise exerting effort to implement projects while inducing investors to fund the firm’s projects. This result assumes that a Controlling group can credibly commit not to consume more than its efficient share of firm cash flow. When potential entrepreneurs cannot solve this credibility problem, some ex ante efficient firms fail to form because their potential principals cannot raise money at a price that does not reflect inefficient levels of private benefits of Control. The ability of Controllers to commit is increasing in the accuracy of judicial review of Controlled transactions. Private contracting, we argue, would materially improve judicial accuracy. Our principal normative recommendation therefore is to demote Corporate fiduciary law from mandatory to a set of defaults. Many developing countries, however, lack an effective legal system, but their public corporations nonetheless commonly have a Controlling shareholder and minority shareholders. We explore various non-legal methods by which this shareholder credibly commits to a cap on private benefits of Control, although we also show that these methods are less efficient than contracting in a mature legal system would be.
