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Success and Failure in the Market for Corporate Control: Evidence from the Petroleum Industry
Author(s) -
Byrd John W.,
Stammerjohan William W.
Publication year - 1997
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1997.tb00904.x
Subject(s) - shareholder , petroleum industry , business , stock price , control (management) , control sample , stock (firearms) , sample (material) , stock market , industrial organization , monetary economics , corporate governance , economics , finance , mechanical engineering , paleontology , chemistry , food science , management , chromatography , series (stratigraphy) , engineering , biology , horse
A sample of firms from the oil industry is used to test whether managerial actions are consistent with the managerial entrenchment or shareholder interest hypothesis. While targeted firms have lower Q ‐ratios than non‐targeted firms, not all low Q ‐ratio firms become targets. High levels of managerial stock ownership decrease the likelihood of a low Q ‐ratio firm being targeted. Managerial resistance to control events is associated with greater share price increases, but a lower likelihood of a control change occurring. Overall, the results are consistent with managers taking actions that protect their positions, possibly at shareholder expense.