Are Subjective Evaluations Biased by Social Factors or Connections? An Econometric Analysis of Soccer Referee Decisions

Many incentive contracts are based on subjective evaluations and contractual disputes depend on judges’ decisions. However, subjective evaluations raise risks of favouritism and distortions. Sport contests are a fruitful field for testing empirically theories of incentives. In this paper the behaviour of the referees in the Italian soccer (football) league (“Serie A”) is analyzed. Using data on injury (or extra) time subjectively assigned by the referee at the end of the match and controlling for factors which may influence it (players substitutions, yellow and red cards, penalty kicks, etc.), we show that referees are biased in favour of home team, in that injury time is significantly greater if home teams are losing. The refereeing bias increases greatly when there is no running track in the stadium and the crowd is close to the pitch. Following the 2006 “Serie A” scandal we test whether favouritism emerges towards teams suspected of connections with referees finding that these teams obtain favourable decisions. Social pressure by the crowd attending the match however appears to be the main cause of favouritism.Favoritism, Subjective evaluation; Sport economics; Soccer; Referee bias;

MBO Financing Risks And Managers\u27 Use Of Anti-Takeover Measures

In a management buyout (MBO) offer, managers have an incentive to offer stockholders a price low enough to compensate them for the risks of increasing their equity ownership in a highly leveraged buyout firm. As these risks increase, managers are more likely to combine their offer with an anti-takeover measure. These measures do not protect a low offer, but do result in a higher takeover price when managers are unwilling to match a competitive offer. Such measures, then, benefit shareholders

Shareholder Activism through Proxy Proposals: The European Perspective

This paper is the first to investigate the corporate governance role of shareholderinitiated proxy proposals in European firms. While proposals in the US are nonbinding even if they pass the shareholder vote, they are legally binding in the UK and most of Continental Europe. Nonetheless, submissions remain relatively infrequent in Continental Europe in particular, with major variations across countries in ownership structures, monitoring incentives, and the laws and regulations governing shareholder access to the proxy. We use sample selection models to analyze target selection and proposal success in terms of the voting outcomes and the stock price effects, and make several contributions to the literature. First, proposal submissions remain infrequent compared to the US in Continental Europe in particular. In the UK proposals typically relate to a proxy contest seeking board changes, while in Continental Europe they are more focused on specific governance issues. Second, there is some evidence that the proposal sponsors are valuable monitors, because the target firms tend to underperform and have low leverage. The sponsors also observe the identity of the voting shareholders, because proposal probability increases in the target’s ownership concentration and the equity stake of institutional investors. Third, while proposals enjoy limited voting success across Europe, they are relatively more successful in the UK. The outcomes are strongest for proposals targeting the board but are also affected by the target characteristics including the CEO’s pay-performance sensitivity. Finally, proposals are met with strong negative stock price effects when they are voted upon at general meetings. This suggests that rather than attribute them control benefits, the market often interprets proposals and their failure to pass the vote as a negative signal of governance concerns. Indeed, the market responds better to proposals submitted against large firms with low leverage, which is consistent with agency considerations. However, the stock price effects are most negative for poorly performing firms with low market-to-book ratios, which implies that the proposal outcomes only intensify the market’s concerns over firms that have previously underperformed.Shareholder activism;shareholder proposals;corporate governance;sample selection

Judicial Review of Defensive Tactics in Proxy Contests: When is Using a Rights Plan Right?

Incumbent management has long enjoyed broad discretion in its use of Rights Plans in proxy contests and joint offers. Legal scholars have accepted the justifications for permitting incumbents such latitude with little comment. The courts also have largely deferred to management's decisions about how they use Rights Plans against dissident shareholder groups. The analysis presented here argues that courts should apply stricter standards. A more stringent balancing test that forces incumbents to justify the use of Rights Plans by explaining how the Rights Plan prevents a specific harm to their shareholders would better protectshareholders from abusive defensive tactics. For any particular defensive tactic, a court must question the explanations offered by incumbents and place the burden of persuasion on management to show that they are acting in shareholders' best interest. The courts should invalidate without further judicial inquiry those provisions of Rights Plans that are directed primarily toward impeding dissidents' proxy campaigns. Courts should permit Rights Plans in proxy contests only when the incumbents can show that the contests are necessary parts of the company's tender offer defense, that their impact on the outcome of a proxy contest will be minimal, and that direct benefits to the target company shareholders justify their adverse effects on dissidents' election campaigns. To determine the impact of particular defensive measures on the outcome of proxy contests, the courts should demand that the parties submit statistical evidence and expert testimony about the effects of Rights Plans on the outcome of the proxy contest. Only after examining the impact of the defensive tactic on the outcome of the proxy contests, and finding it justified by the benefit to the target company's shareholders, should a court approve any use of Rights Plans in proxy contests. When the incumbents fail to carry this burden, then the court should strike down these defenses and permit shareholders to exercise their vote in corporate elections freely and without restraint

Judicial Review of Defensive Tactics in Proxy Contests: When Is Using a Rights Plan Right?

Proxy contests have reemerged recently as an important part of the market for corporate control. After years of indifference to corporate elections, dissident shareholders have turned once again to the ballot box as a means of removing unwanted management. In a surprisingly large number of these battles, the challengers have succeeded in getting all or much of what they wanted. The resurgence of proxy contests has sparked renewed interest by incumbent managements in developing powerful new defensive tactics in corporate elections. Incumbents\u27 time-honored campaign strategies, such as switching the annual shareholders\u27 meeting date, or restricting the potential candidates who can run for office, are no longer sufficient to ensure a management victory. In their place incumbents have substituted more drastic measures, such as Rights Plans,\u27 popularly referred rate elections, dissident shareholders have turned once again to the ballot box as a means of removing unwanted management. In a surprisingly large number of these battles, the challengers have succeeded in getting all or much of what they wanted. The resurgence of proxy contests has sparked renewed interest by incumbent managements in developing powerful new defensive tactics in corporate elections. Incumbents\u27 time-honored campaign strategies, such as switching the annual shareholders\u27 meeting date, or restricting the potential candidates who can run for office, are no longer sufficient to ensure a management victory. In their place incumbents have substituted more drastic measures, such as Rights Plans,\u27 popularly referred to as poison pills, that sharply limit, or even eliminate, shareholders\u27 ability to elect the directors of their choice. Should judges permit incumbents to use these powerful defensive tactics to thwart dissident shareholders\u27 efforts to unseat existing managers? This Article argues that the courts have mistakenly favored incumbents in resolving conflicts between incumbents\u27 desire to use defensive tactics to protect themselves and target company shareholders from harmful proxy contests, and the shareholders\u27 need to have an effective mechanism for replacing unwanted (and inefficient) managers

Takeover defenses, ownership structure and stock returns in the Netherlands: an empirical analysis

This study empirically examines the relationships between a firm’s takeover defenses and its ownership structure and stock returns. Analyzing data of Dutch listed companies, we find that multiple antitakeover defenses are increasingly adopted when firms are characterized by relatively lower ownership concentration. The evidence supports the hypothesis that more concentrated ownership of shares provides more effective monitoring of managers. As defense\ud by issuing preferred share has recently been the most widely adopted mechanism in the Netherlands, its impact on shareholders’ wealth is also analyzed. We observe the presence of two opposing effects of this antitakeover measur

Corporate Governance and Control

Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the theoretical and empirical research on the main mechanisms of corporate control, discuss the main legal and regulatory institutions in different countries, and examine the comparative corporate governance literature. A fundamental dilemma of corporate governance emerges from this overview: regulation of large shareholder intervention may provide better protection to small shareholders; but such regulations may increase managerial discretion and scope for abuse.

Are hostile takeovers different?

Consolidation and merger of corporations ; Corporations ; Stockholders

Financial crisis and the effect of corporate governance practices on banks’ financial performance

This paper aims to identify whether the selected corporate governance practices of Malaysian Banks, affect either positively or negatively, its rate of return on equity (ROE).Descriptive research design has been used for this research to describe the characteristic of the banks’ compliance to corporate governance and the impact on its ROE. Data from all ten listed local banks in Malaysia were obtained to measure against four independent variables, ie. the proportion of non-executive directors, the proportion of institutional investors, the level of gearing and the concentration of ownership. It was found that the higher the level of gearing of the bank, the higher is the monitoring role of the lenders and the better would be the bank’s ROE. Future research can also compare pre and post-financial crisis corporate governance practices and its impact on Banks’ financial performances