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Thomas J. Chemmanur - One of the best experts on this subject based on the ideXlab platform.
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Management Quality and Antitakeover Provisions
The Journal of Law and Economics, 2020Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:We present the first empirical analysis of the relationship between a firm’s Management Quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent Management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher Quality Management. We find that, first, firms with higher Quality Management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher Management Quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis and support the long-term value creation hypothesis
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Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity
SSRN Electronic Journal, 2018Co-Authors: Thomas J. Chemmanur, Manish Gupta, Karen SimonyanAbstract:Using hand-collected data on top Management team human capital (“Management Quality”) of a large sample of private firms, we analyze the effect of top Management Quality on pre-IPO innovativeness and the innovation strategies of these firms. We also analyze how Management Quality and pre-IPO innovation relate to these firms’ IPO characteristics. We hypothesize that firms with higher Quality Management teams invest in a greater proportion of long-term (innovative) projects, select better innovation projects, and manage innovation resources more efficiently, resulting in higher innovation productivity. We also hypothesize that such firms reap greater IPO market rewards. The evidence supports these hypotheses.
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Human Capital, Management Quality, and Firm Performance
SSRN Electronic Journal, 2014Co-Authors: Thomas J. Chemmanur, Lei Kong, Karthik KrishnanAbstract:We make use of a panel data set from the BoardEx database on the Quality of the Management teams of 4635 firms during 1999 to 2010 to analyze the relationship between the Management Quality of firms and their long-run operating performance, current market valuations, and future long-run stock returns. We create a Management team Quality index using common factor analysis from various individual proxies for the Quality of a firm's Management team, such as Management team size, fraction of managers with MBAs, the average employment- and education-based connections of each manager in the Management team, fraction of members with prior working experience in the top Management team, and the average number of board positions that each manager serves on. We find that this index is positively related to firms' long-run operating performance, current market valuations, and future long-run stock returns. We overcome hurdles related to endogeneity by using Vietnam War draft deferment rules for graduate education. Individuals graduating from college during this period enrolled into graduate degree programs for reasons unrelated to their intrinsic Quality, i.e., to avoid getting drafted. Using this as an instrument, we find a causal relationship between our Management Quality index and firms' long-run future operating performance, current market valuations, and long-run future stock returns. We also find that firms with higher Management Quality are characterized by larger levels of investment and investment growth. The relationship of Management Quality with firm valuation and performance is stronger for firms in R&D intensive, more competitive, financially constrained industries, and during periods of recession.
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The Role of Management Quality in the IPOs of Venture-Backed Entrepreneurial Firms
SSRN Electronic Journal, 2013Co-Authors: Thomas J. Chemmanur, Karen Simonyan, Hassan TehranianAbstract:We make use of hand-collected data on the Quality and reputation of the Management teams of a large sample of entrepreneurial firms going public to analyze the role of Management Quality in the IPOs of venture capital (VC)-backed firms for the first time in the literature. We hypothesize that Management Quality may affect a VC-backed firm’s IPO characteristics and post-IPO operating performance through two channels: a “certification” channel, where firms with higher Management Quality face reduced information asymmetry in the IPO market, and therefore find it easier and cheaper to go public; and an “ability” channel, where firms with higher Quality Managements select better projects and implement them more ably. Further, VC-backing may itself affect a firm’s IPO, indirectly by affecting a firm’s Management Quality and directly through the above certification and ability channels. These hypotheses imply that VC-backing will be associated with higher Management Quality, and both Management Quality and VC-backing will have a favorable effect on firms’ IPO characteristics, increase IPO participation by financial market players, allow firms to go public earlier, yield higher IPO and immediate after-market valuations, and will be positively related to changes in post-IPO operating performance. Our OLS regression, propensity-score matching, and instrumental variable analyses provide empirical support for the above hypotheses. While VC-backing and Management Quality act as substitutes in their effect on a firm’s IPO characteristics, they act as complements in their effect on firms’ IPO and secondary market valuations and post-IPO operating performance.
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The Effect of Venture Capital Backing on the Top Management Quality of Entrepreneurial Firms and Implications for Initial Public Offerings
SSRN Electronic Journal, 2012Co-Authors: Thomas J. Chemmanur, Karen Simonyan, Hassan TehranianAbstract:In this paper we make use of hand-collected data on the Quality and reputation of the Management teams of a large sample of 3,240 entrepreneurial firms going public during 1993-2004 to conduct the first large-sample study of the relationship between venture capital (VC) backing and Management Quality and the effect of these two variables on a firm’s IPO characteristics and valuation, post-IPO financial and investment policies, and post-IPO operating performance. We hypothesize that VC-backing positively affects the Quality of a firm’s Management team, and that both Management Quality and VC-backing play a certifying role in conveying a firm’s intrinsic value to the IPO market, reducing the information asymmetry faced by it. Our empirical findings are broadly consistent with the above hypotheses, and can be summarized as follows. First, VC-backed firms are associated with higher Management Quality compared to non-VC-backed firms. Second, both Management Quality and VC-backing have a positive effect on a firm’s IPO underwriter reputation, offer size, post-IPO analyst coverage, and post-IPO institutional equity holdings; and a negative effect on its costs of going public. Third, Management Quality and VC-backing also have a positive effect on firm valuation, both in the IPO and in the immediate secondary market. Fourth, Management Quality is associated with lower post-IPO leverage ratios, and both Management Quality and VC-backing are associated with larger post-IPO investment levels, as well as larger values of post-IPO acquisitions. Finally, both VC-backing and Management Quality are positively related to changes in a firm’s post-IPO operating performance. While VC-backing and Management Quality act as substitutes in their effect on a firm’s IPO characteristics, they act as complements in their effect on a firm’s IPO valuation, post-IPO financial and investment policies, and post-IPO operating performance.
Karen Simonyan - One of the best experts on this subject based on the ideXlab platform.
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Management Quality and Antitakeover Provisions
The Journal of Law and Economics, 2020Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:We present the first empirical analysis of the relationship between a firm’s Management Quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent Management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher Quality Management. We find that, first, firms with higher Quality Management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher Management Quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis and support the long-term value creation hypothesis
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Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity
SSRN Electronic Journal, 2018Co-Authors: Thomas J. Chemmanur, Manish Gupta, Karen SimonyanAbstract:Using hand-collected data on top Management team human capital (“Management Quality”) of a large sample of private firms, we analyze the effect of top Management Quality on pre-IPO innovativeness and the innovation strategies of these firms. We also analyze how Management Quality and pre-IPO innovation relate to these firms’ IPO characteristics. We hypothesize that firms with higher Quality Management teams invest in a greater proportion of long-term (innovative) projects, select better innovation projects, and manage innovation resources more efficiently, resulting in higher innovation productivity. We also hypothesize that such firms reap greater IPO market rewards. The evidence supports these hypotheses.
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The Role of Management Quality in the IPOs of Venture-Backed Entrepreneurial Firms
SSRN Electronic Journal, 2013Co-Authors: Thomas J. Chemmanur, Karen Simonyan, Hassan TehranianAbstract:We make use of hand-collected data on the Quality and reputation of the Management teams of a large sample of entrepreneurial firms going public to analyze the role of Management Quality in the IPOs of venture capital (VC)-backed firms for the first time in the literature. We hypothesize that Management Quality may affect a VC-backed firm’s IPO characteristics and post-IPO operating performance through two channels: a “certification” channel, where firms with higher Management Quality face reduced information asymmetry in the IPO market, and therefore find it easier and cheaper to go public; and an “ability” channel, where firms with higher Quality Managements select better projects and implement them more ably. Further, VC-backing may itself affect a firm’s IPO, indirectly by affecting a firm’s Management Quality and directly through the above certification and ability channels. These hypotheses imply that VC-backing will be associated with higher Management Quality, and both Management Quality and VC-backing will have a favorable effect on firms’ IPO characteristics, increase IPO participation by financial market players, allow firms to go public earlier, yield higher IPO and immediate after-market valuations, and will be positively related to changes in post-IPO operating performance. Our OLS regression, propensity-score matching, and instrumental variable analyses provide empirical support for the above hypotheses. While VC-backing and Management Quality act as substitutes in their effect on a firm’s IPO characteristics, they act as complements in their effect on firms’ IPO and secondary market valuations and post-IPO operating performance.
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The Effect of Venture Capital Backing on the Top Management Quality of Entrepreneurial Firms and Implications for Initial Public Offerings
SSRN Electronic Journal, 2012Co-Authors: Thomas J. Chemmanur, Karen Simonyan, Hassan TehranianAbstract:In this paper we make use of hand-collected data on the Quality and reputation of the Management teams of a large sample of 3,240 entrepreneurial firms going public during 1993-2004 to conduct the first large-sample study of the relationship between venture capital (VC) backing and Management Quality and the effect of these two variables on a firm’s IPO characteristics and valuation, post-IPO financial and investment policies, and post-IPO operating performance. We hypothesize that VC-backing positively affects the Quality of a firm’s Management team, and that both Management Quality and VC-backing play a certifying role in conveying a firm’s intrinsic value to the IPO market, reducing the information asymmetry faced by it. Our empirical findings are broadly consistent with the above hypotheses, and can be summarized as follows. First, VC-backed firms are associated with higher Management Quality compared to non-VC-backed firms. Second, both Management Quality and VC-backing have a positive effect on a firm’s IPO underwriter reputation, offer size, post-IPO analyst coverage, and post-IPO institutional equity holdings; and a negative effect on its costs of going public. Third, Management Quality and VC-backing also have a positive effect on firm valuation, both in the IPO and in the immediate secondary market. Fourth, Management Quality is associated with lower post-IPO leverage ratios, and both Management Quality and VC-backing are associated with larger post-IPO investment levels, as well as larger values of post-IPO acquisitions. Finally, both VC-backing and Management Quality are positively related to changes in a firm’s post-IPO operating performance. While VC-backing and Management Quality act as substitutes in their effect on a firm’s IPO characteristics, they act as complements in their effect on a firm’s IPO valuation, post-IPO financial and investment policies, and post-IPO operating performance.
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Management Quality and Antitakeover Provisions
The Journal of Law and Economics, 2011Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:Abstract We present the first empirical analysis of the relationship between a firm’s Management Quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent Management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher Quality Management. We find that, first, firms with higher Quality Management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher Management Quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis an...
Zahir Irani - One of the best experts on this subject based on the ideXlab platform.
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A Prototype Project Management Quality Cost Information System
2020Co-Authors: Peter E.d. Love, Zahir IraniAbstract:A prototype Project Management Quality Cost information System, PROMQACS, was developed to determine Quality costs in construction projects. The structure and information requirements that are needed to provide a classification system of Quality costs are identified and discussed. The developed system was tested and implemented, in collaboration with a leading Australian construction contractor, so that the information and Management issues needed to develop PROMQACS into a software program could be determined. The system was initially used to identify the cost and causes of rework that occurred within selected projects being procured by the contracting organization. PROMQACS can enable project participants to identify shortcomings in their project-related activities so that they can take the appropriate action to improve their Management practices in future projects.
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a project Management Quality cost information system for the construction industry
Information & Management, 2003Co-Authors: Peter E.d. Love, Zahir IraniAbstract:A prototype Project Management Quality Cost System (PROMQACS) was developed to determine Quality costs in construction projects. The structure and information requirements that are needed to provide a classification system of Quality costs were identified and discussed. The developed system was tested and implemented in two case study construction projects to determine the information and Management issues needed to develop PROMQACS into a software program. In addition, the system was used to determine the cost and causes of rework that occurred in the projects. It is suggested that project participants can use the information in PROMQACS to identify shortcomings in their project-related activities and therefore take the appropriate action to improve their Management practices in future projects. The benefits and limitations of PROMQACS are identified.
Hans Georg Gemunden - One of the best experts on this subject based on the ideXlab platform.
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predicting project portfolio success by measuring Management Quality a longitudinal study
IEEE Transactions on Engineering Management, 2013Co-Authors: Daniel Jonas, Alexander Kock, Hans Georg GemundenAbstract:Many firms struggle with managing a portfolio of multiple interdependent projects. Therefore, practitioners and researchers are eager to learn which factors affect project portfolio success and how it can be increased. However, it takes some time for changes in Management practices to reveal their potential. Thus, it is interesting to know how portfolio success can be predicted and what the possible indicators of this eventual success will look like. For this purpose, we propose the concept of Management Quality, which allows the anticipation of project portfolio success much earlier than the time at which established success criteria become measurable. We conceptualize and empirically validate Management Quality as a multidimensional construct consisting of information Quality, allocation Quality, and cooperation Quality. We demonstrate the prognostic relevance of Management Quality to project portfolio success on a longitudinal sample of project portfolios with multiple informants over a time period of two years. Our results show a strong positive influence and thus support the notion of a causal link between Management Quality and portfolio success.
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Predicting Project Portfolio Success by Measuring Management Quality—A Longitudinal Study
IEEE Transactions on Engineering Management, 2013Co-Authors: Daniel Jonas, Alexander Kock, Hans Georg GemundenAbstract:Many firms struggle with managing a portfolio of multiple interdependent projects. Therefore, practitioners and researchers are eager to learn which factors affect project portfolio success and how it can be increased. However, it takes some time for changes in Management practices to reveal their potential. Thus, it is interesting to know how portfolio success can be predicted and what the possible indicators of this eventual success will look like. For this purpose, we propose the concept of Management Quality, which allows the anticipation of project portfolio success much earlier than the time at which established success criteria become measurable. We conceptualize and empirically validate Management Quality as a multidimensional construct consisting of information Quality, allocation Quality, and cooperation Quality. We demonstrate the prognostic relevance of Management Quality to project portfolio success on a longitudinal sample of project portfolios with multiple informants over a time period of two years. Our results show a strong positive influence and thus support the notion of a causal link between Management Quality and portfolio success.
Imants Paeglis - One of the best experts on this subject based on the ideXlab platform.
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Management Quality and Antitakeover Provisions
The Journal of Law and Economics, 2020Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:We present the first empirical analysis of the relationship between a firm’s Management Quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent Management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher Quality Management. We find that, first, firms with higher Quality Management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher Management Quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis and support the long-term value creation hypothesis
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Management Quality and Antitakeover Provisions
The Journal of Law and Economics, 2011Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:Abstract We present the first empirical analysis of the relationship between a firm’s Management Quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent Management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher Quality Management. We find that, first, firms with higher Quality Management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher Management Quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis an...
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Management Quality and Equity Issue Characteristics: A Comparison of SEOs and IPOs
Financial Management, 2010Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:We use a unique sample of hand-collected data on the Management Quality of firms making SEOs or IPOs to analyze the relationship between the Management Quality of a firm and its SEO characteristics, and to compare the effect of Management Quality on equity issue characteristics in SEOs and IPOs. We hypothesize that higher Quality managers are more credible to outsiders, thereby reducing the information asymmetry facing their firm in the equity market and outsiders’ information production costs about the firm. Thus, equity issues of firms with higher Management Quality will be associated with more reputable underwriters, smaller underwriting spreads and other expenses, and smaller discounts (for SEOs). Further, since better managers are able to select better (larger NPV for a given scale) projects, higher Management Quality will also be associated with larger offer sizes. Finally, since we expect SEO firms to suffer from a smaller extent of information asymmetry compared to IPO firms, the above effects will be smaller for SEO firms compared to IPO firms. Our empirical results support the above hypotheses. Our direct tests of the relationship between Management Quality and information asymmetry, and our comparison of information asymmetry in SEOs versus IPOs, provide further support for the above hypotheses.
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Management Quality, Financial and Investment Policies, and Asymmetric Information
Journal of Financial and Quantitative Analysis, 2009Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:AbstractWe develop measures of the Management Quality of firms and make use of a unique sample of hand-collected data to examine the relationship between the reputation and Quality of a firm’s Management and its financial and investment policies, a relationship that has so far received little attention in the literature. We hypothesize that better and more reputable managers are able to convey the intrinsic value of their firm more credibly to outsiders, thus reducing the information asymmetry facing their firm in the equity market. Given this, firms with better and more reputable managers will have more access to the equity market, so that we expect lower leverage ratios for these firms. In addition, they will have less need to signal using dividends, so that they will have lower dividend payout ratios. Further, since better managers are likely to select better projects (having a larger net present value (NPV) for any given scale) and to implement them more ably, higher Management Quality will also be associated with higher levels of investment. We present evidence consistent with the above hypotheses. Our direct tests of the relationship between Management Quality and asymmetric information also indicate that higher Management Quality leads to a reduction in the extent of information asymmetry facing a firm in the equity market.
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Management Quality, Financial Policies, and Asymmetric Information
SSRN Electronic Journal, 2006Co-Authors: Thomas J. Chemmanur, Imants Paeglis, Karen SimonyanAbstract:We develop measures of the Management Quality of firms and make use of a unique sample of hand-collected data to examine the relationship between the reputation and Quality of a firm's Management and its financial policies, a relationship that has so far received little attention in the literature. We hypothesize that better and more reputable managers are able to convey the intrinsic value of their firm more credibly to outsiders, thus reducing the information asymmetry facing their firm in the equity market. Given this, firms with better and more reputable Managements will have more access to the equity market, so that we expect lower leverage ratios for these firms. In addition, they will have less need to signal using dividends, so that they will have lower dividend payout ratios. Further, since better managers are likely to select better projects (having a larger NPV for any given scale) and implement them more ably, higher Management Quality will also be associated with higher levels of investment and R&D expenditures. We present evidence consistent with the above hypotheses. Our direct tests of the relationship between Management Quality and asymmetric information also indicate that higher Management Quality leads to a reduction in the extent of information asymmetry facing a firm in the equity market.