Mergers, Executive Risk Reduction, and Stockholder Wealth
Among the possible consequences of agency problems between corporate owners and managers is a tendency by managers to make investment decisions for their firms that are deliberately aimed at reducing firm risk, as a means to control managers’ personal wealth risk. The literature has suggested that such behavior may occur to the detriment of shareholder wealth, and that mergers may be a particular class of investment decisions for which the behavior would be observable. We test these hypotheses empirically, but find no evidence from our merger sample that risk reduction for the acquiring firm is the typical outcome nor that, when it occurs, it is differentially costly for shareholders.
Volume (Year): 24 (1989)
Issue (Month): 04 (December)
|Contact details of provider:|| Postal: |
Web page: http://journals.cambridge.org/jid_JFQ
When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:24:y:1989:i:04:p:459-472_01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters)
If references are entirely missing, you can add them using this form.