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The structure of ownership and corporate acquisition strategies
Author(s) -
Wright Peter,
Kroll Mark,
Lado Augustine,
Van Ness Bonnie
Publication year - 2002
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/smj.208
Subject(s) - equity (law) , stock (firearms) , business , principal–agent problem , agency cost , enterprise value , financial economics , value creation , context (archaeology) , agency (philosophy) , value (mathematics) , accounting , corporate governance , economics , industrial organization , finance , shareholder , mechanical engineering , paleontology , philosophy , epistemology , machine learning , biology , political science , computer science , law , engineering
In this study, we examine in an agency‐theoretic context the influence of executive equity stakes upon corporate strategy and firm value. We argue that beneficial, risk‐increasing corporate strategies may initially be emphasized but non‐value‐maximizing, risk‐reducing strategies may subsequently be emphasized as managers expand their stock ownership. We alternatively contend that stock options may have a consistently positive impact on firm risk taking and acquisition returns. The empirical findings are supportive of our expectations. Copyright © 2002 John Wiley & Sons, Ltd.