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CORPORATE GOVERNANCE WITHIN THE CONTEXT OF ANTITAKEOVER PROVISIONS
Author(s) -
SUNDARAMURTHY CHAMU
Publication year - 1996
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199605)17:5<377::aid-smj816>3.0.co;2-b
Subject(s) - shareholder , corporate governance , business , accounting , voting , context (archaeology) , stock (firearms) , institutional investor , principal–agent problem , agency cost , finance , law , politics , mechanical engineering , paleontology , political science , biology , engineering
This paper advances understanding of corporate governance relationships with a longitudinal study of multiple antitakeover options. Prior analyses have been primarily cross‐sectional, focused exclusively on a single provision ignoring provisions which require subsequent stockholder approval. The current study uses agency theory, and broadens this perspective by examining the differential impact of institutional investors stockholding, managerial stock ownership, and corporate board characteristics on the rate of adoption of six provisions, including provisions which do and do not require stockholder approval. Results of hazard analyses of the rate of amendment adoption of 185 firms between 1984 and 1988 indicate that the impact of governance variables on antitakeover provisions differ depending on whether these actions require stockholder approval or not. The pattern of differences indicates that institutional investors use their voting power when they are given an opportunity to vote and that substitution between direct shareholder control and managerial stock ownership exists.