Does antitakeover protection reduce myopic managerial investment behavior?: An article from: Journal of Managerial Issues
Book Details
Author(s)Mark S. Johnson, Ramesh P. Rao
ISBN / ASINB00097UEPA
ISBN-13978B00097UEP8
AvailabilityAvailable for download now
Sales Rank99,999,999
MarketplaceUnited States 🇺🇸
Description
This digital document is an article from Journal of Managerial Issues, published by Pittsburg State University - Department of Economics on December 22, 1997. The length of the article is 6001 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.
From the author: In this study we provide a test of Stein's model. Stein's model hypothesizes that when managers are provided with long-term employment contracts, as provided by antitakeover amendments, they will reduce their myopic behavior and increase the firm's level of investment in the areas of capital spending and R&D. We find that managerial investment behavior, as reflected in analysts' projections of future capital expenditures, is not significantly impacted by the adoption of antitakeover amendments. Several previous studies have tested the hypothesis of Stein's model, examining changes in the actual level of capital spending and R&D around the time of antitakeover amendment adoption, providing mixed results. The mixed results seen in these studies may be the result of survivorship bias. The sample and data used in this study do not suffer from survivorship bias. Thus, this study provides an alternative test of antitakeover amendment effects. The results suggest that government policy makers and others who wish to induce financial managers to become more farsighted in their decisions and increase capital spending and R&D expenditures should not look to antitakeover amendments or restrictive antitakeover laws because they are unlikely to produce the desired effect.
Citation Details
Title: Does antitakeover protection reduce myopic managerial investment behavior?
Author: Mark S. Johnson
Publication:Journal of Managerial Issues (Refereed)
Date: December 22, 1997
Publisher: Pittsburg State University - Department of Economics
Volume: v9 Issue: n4 Page: p497(15)
Distributed by Thomson Gale
From the author: In this study we provide a test of Stein's model. Stein's model hypothesizes that when managers are provided with long-term employment contracts, as provided by antitakeover amendments, they will reduce their myopic behavior and increase the firm's level of investment in the areas of capital spending and R&D. We find that managerial investment behavior, as reflected in analysts' projections of future capital expenditures, is not significantly impacted by the adoption of antitakeover amendments. Several previous studies have tested the hypothesis of Stein's model, examining changes in the actual level of capital spending and R&D around the time of antitakeover amendment adoption, providing mixed results. The mixed results seen in these studies may be the result of survivorship bias. The sample and data used in this study do not suffer from survivorship bias. Thus, this study provides an alternative test of antitakeover amendment effects. The results suggest that government policy makers and others who wish to induce financial managers to become more farsighted in their decisions and increase capital spending and R&D expenditures should not look to antitakeover amendments or restrictive antitakeover laws because they are unlikely to produce the desired effect.
Citation Details
Title: Does antitakeover protection reduce myopic managerial investment behavior?
Author: Mark S. Johnson
Publication:Journal of Managerial Issues (Refereed)
Date: December 22, 1997
Publisher: Pittsburg State University - Department of Economics
Volume: v9 Issue: n4 Page: p497(15)
Distributed by Thomson Gale
