On the shareholder wealth maximization objective of corporate governance: the case of leveraged recapitalizations

Article Abstract:

Previous research has shown investors gaining abnormally large positive returns after leveraged buyouts (LBOs) and recapitalizations. However, analysis shows that reductions in a firm's financial slack, rather than improved operating efficiency, greatly influence increases in stockholder wealth after LBOs and recaps. Moreover, recaps and LBOs do not improve operating profitability, although they have been shown to reduce a firm's workforce and asset base. The results indicate the need for more effective systems of corporate governance.

Evaluation, Economic aspects, Stockholders, Corporate reorganizations, Leveraged buyouts

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Knowledge and the firm

Article Abstract:

Activities of the firm can be associated with different types of knowledge. Factual knowledge regarding production input prices, company's sales volume and inventory and competitor's sales and inventory, among other items can be considered as descriptive knowledge. On the other hand, algorithmic knowledge regarding task performance, such as customer order-taking and manufacturing quality control, can be considered as procedural knowledge.

Financial management, Knowledge, Theory of, Epistemology

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Dual office holding, corporate governance and takeover gains

Article Abstract:

Bidding companies' gains in takeovers are not affected by dual office holding. Utilization of a sample of bidding firms covering the 1985-1990 period revealed that dual office holding in a company is linked with a higher likelihood of outside directors being in a majority. Such case does not result to inefficient corporate investment decisions and wealth loss for stockholders as dual office holders undertake close monitoring.

Management research

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