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Managerial Voting Rights and Seasoned Public Equity Issues

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  • Fields, L. Paige
  • Mais, Eric L.

Abstract

This paper examines the relation between changes in firm value associated with public equityissue announcements and management ownership, nonmanagement large block ownership, institutional ownership, information variables, and leverage. A significant negative relationis found between the ratio of announcement period abnormal returns to changes in management ownership and the level of management ownership. This result is consistent with Stulz (1988) who predicts that firm value increases at a decreasing rate as management control of voting rights increases. This finding is also consistent with improvements in alignment of interests, where such improvements diminish as management becomes entrenched. The announcement period abnormal returns appear to be unrelated to outside blockholdings (large block ownership or institutional holdings), information variables, or leverage.

Suggested Citation

  • Fields, L. Paige & Mais, Eric L., 1994. "Managerial Voting Rights and Seasoned Public Equity Issues," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(03), pages 445-457, September.
  • Handle: RePEc:cup:jfinqa:v:29:y:1994:i:03:p:445-457_00
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    Cited by:

    1. Yi-Mien Lin & Shwu-Jen You & Fung-Jiao Lin, 2008. "The Effects of Pre-issue Information Releases on Seasoned Equity Offerings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(9-10), pages 1138-1163.
    2. Bernard Yeung & Randall Morck & Daniel Wolfenzon, 2004. "Corporate Governance, Economic Entrenchment and Growth," Working Papers 04-21, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Randall Morck, 2003. "Why Some Double Taxation Might Make Sense: The Special Case of Inter-corporate Dividends," NBER Working Papers 9651, National Bureau of Economic Research, Inc.
    4. Renée Adams & Daniel Ferreira, 2008. "One Share-One Vote: The Empirical Evidence," Review of Finance, European Finance Association, vol. 12(1), pages 51-91.
    5. Doh, Jonathan P. & Teegen, Hildy, 2002. "Nongovernmental organizations as institutional actors in international business: theory and implications," International Business Review, Elsevier, vol. 11(6), pages 665-684, December.
    6. repec:eee:crpeac:v:21:y:2010:i:4:p:318-328 is not listed on IDEAS
    7. Dbouk, Wassim & Ismail, Ahmad, 2010. "Corporate governance and long run performance of seasoned equity issuers," Journal of Multinational Financial Management, Elsevier, vol. 20(4-5), pages 159-177, December.

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