IDEAS home Printed from https://ideas.repec.org/a/bla/jbfnac/v20y1993i3p417-425.html

Corporate Operating Performance Around The Proxy Contest

Author

Listed:
  • Tarun K. Mukherjee
  • Oscar Varela

Abstract

By comparing the operating performance (ROE) between a group of firms with proxy contests for control and a matching group of no‐contest firms, this study concludes that contest firms generally underperformed matching firms in both pre‐ and post‐contest periods. Lower profit margins of contest firms appear to be the major cause of underperformance. Results are different when proxy contest companies are segregated into successful and unsuccessful contest groups. Firms in which dissidents succeeded in gaining control were characterized by underperformance in the pre‐contest period and improved performance in the post‐contest period. The improvement seems to be due to more efficient management of the profit margin. The performance of firms in which dissidents failed, however, was close to that of the matching group in the pre‐contest period but deteriorated in the post‐contest period.

Suggested Citation

  • Tarun K. Mukherjee & Oscar Varela, 1993. "Corporate Operating Performance Around The Proxy Contest," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 20(3), pages 417-425, April.
    • Handle: RePEc:bla:jbfnac:v:20:y:1993:i:3:p:417-425
    DOI: 10.1111/j.1468-5957.1993.tb00265.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-5957.1993.tb00265.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1468-5957.1993.tb00265.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dodd, Peter & Warner, Jerold B., 1983. "On corporate governance : A study of proxy contests," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 401-438, April.
    2. Douglas Victor Austin, 1964. "The Causes Of Proxy Contests: An Empirical Study, 1956–60," Journal of Finance, American Finance Association, vol. 19(1), pages 107-108, March.
    3. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(2), pages 110-110.
    4. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(4), pages 351-351.
    5. Richard M. Duvall & Douglas V. Austin, 1965. "Predicting The Results Of Proxy Contests," Journal of Finance, American Finance Association, vol. 20(3), pages 464-471, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mulherin, J. Harold & Poulsen, Annette B., 1998. "Proxy contests and corporate change: implications for shareholder wealth," Journal of Financial Economics, Elsevier, vol. 47(3), pages 279-313, March.
    2. Zhang, Shuran, 2021. "Directors’ career concerns: Evidence from proxy contests and board interlocks," Journal of Financial Economics, Elsevier, vol. 140(3), pages 894-915.
    3. Zaher Zantout, 1994. "EXTERNAL CAPITAL MARKET CONTROL, CORPORATE RESTRUCTURING, AND FIRM PERFORMANCE DURING THE 1980s," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 21(1), pages 37-64, January.
    4. Sharon Lee Bojanic & Dennis T. Officer, 1994. "Corporate Takeover Barriers: Valuation And Firm Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 21(4), pages 589-601, June.
    5. Emery A. Trahan & Hany A. Shawky, 1992. "Financial Characteristics Of Acquiring Firms: An Industry Specific Approach," Review of Financial Economics, John Wiley & Sons, vol. 1(2), pages 81-94, March.
    6. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    7. Mataigne, Virginie & Manigart, Sophie & Luypaert, Mathieu, 2021. "Acquisitions: A curse or blessing for direct competitors? The impact of target ownership structure," Journal of Corporate Finance, Elsevier, vol. 69(C).
    8. Mikami, Kazuhiko, 1999. "Proxy contests and corporate democracy," Journal of Economic Behavior & Organization, Elsevier, vol. 40(4), pages 353-371, December.
    9. Michael J. Fleming, 1995. "New evidence on the effectiveness of the proxy mechanism," Research Paper 9503, Federal Reserve Bank of New York.
    10. Peck, Sarah W., 1996. "The influence of professional investors on the failure of management buyout attempts," Journal of Financial Economics, Elsevier, vol. 40(2), pages 267-294, February.
    11. David A. Butz, 1991. "Bust-Up Takeover Bids and Asymmetric Information," UCLA Economics Working Papers 615, UCLA Department of Economics.
    12. Grossman, Sanford J. & Hart, Oliver D., 1988. "One share-one vote and the market for corporate control," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 175-202, January.
    13. repec:bla:jcmkts:v:47:y:2009:i::p:55-79 is not listed on IDEAS
    14. Maurizio Zollo, 1998. "Strategies or Routines ? Knowledge Codification, Path-Dependence and the Evolution of Post-Acquisition Integration Practices in the U.S. Banking Industry," Center for Financial Institutions Working Papers 97-10, Wharton School Center for Financial Institutions, University of Pennsylvania.
    15. Sang V. Nguyen & Michael Ollinger, 2006. "Mergers and Acquisitions and Productivity in the U.S. Meat Products Industries: Evidence from the Micro Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 606-616.
    16. Pak Hung Au & Yuk‐Fai Fong & Jin Li, 2020. "Negotiated Block Trade And Rebuilding Of Trust," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 901-939, May.
    17. Ly, Kim Cuong & Liu, Hong & Opong, Kwaku, 2017. "Who acquires whom among stand-alone commercial banks and bank holding company affiliates?," International Review of Financial Analysis, Elsevier, vol. 54(C), pages 144-158.
    18. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Principals, Agents and Incomplete Contracts: Are Surrender of Control and Renegotiation the Solution?," CFI Discussion Papers 1603, Centre for Finance and Investment, Heriot Watt University.
    19. Blánaid Clarke & Niamh Hardiman, 2012. "Crisis in the Irish Banking System," Working Papers 201203, Geary Institute, University College Dublin.
    20. Dennis Mueller, 1996. "Antimerger policy in the United States: History and lessons," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(3), pages 229-253, October.
    21. Mehrez Ben Slama & Dhafer Saidane & Hassouna Fedhila, 2012. "How to identify targets in the M&A banking operations? Case of cross-border strategies in Europe by line of activity," Review of Quantitative Finance and Accounting, Springer, vol. 38(2), pages 209-240, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jbfnac:v:20:y:1993:i:3:p:417-425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.