Agency problems as antecedents to unrelated mergers and diversification: Amihud and Lev reconsidered
Article Abstract:
Amihud and Lev's agency theory posited that principals and agents favor higher-return projects over lower-return projects but they differ in their preferences for uncertainty or risk linked to these projects. Their 1981 paper showed that managers, if not strictly checked by large block shareholders, will try to minimize their employment risk using unrelated mergers and acquisitions. A reexamination of this study was performed to determine the applicability of agency theory to strategic behaviors. This new study tested hypotheses pertaining to the relationship among ownership structure, board vigilance, corporate strategy and corporate performance. Using data used by Amihud and Lev as well as new data, the study did not support either the conclusions of Amihud and Lev or the aforementioned agency theory.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
Post-acquisition financial performance and executive compensation
Article Abstract:
The effects of post-acquisition financial performance on executive compensation were investigated by analyzing 127 firms. Acquiring firms and non-acquiring firms were compared in terms of size, type of acquisition, executive motivation, and financial results. The results indicated that major acquisitions led to poor post-acquisition performance, and executives of those companies experienced considerable increases in compensation. Non-acquiring firms exhibited a strong relationship between performance and changes in executive compensation.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1990
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Exchange rate uncertainty, forward contracts, and international portfolio selection. Estimating the correlation structure of international share prices
- Abstracts: European takeovers and mergers: barriers to harmonisation. Management buy-outs: the European experience. British buy-outs and transatlantic trends
- Abstracts: The winner's curse and bidder competition in acquisitions: evidence from failed bank auctions. Preemptive bidding and the role of the medium of exchange in acquisitions
- Abstracts: Backwardation in oil futures markets: theory and empirical evidence
- Abstracts: Can the non-resident trust survive? Taxing calculations