The Determinants of Takeovers: Recent Evidence from U.S. Thrifts

This paper uses a two-step methodology to examine the relationship between managerial cost inefficiency and the takeover of U.S. thrifts during a period of market liberalization and widespread takeover activity, 1994 to 2000. In the first stage using stochastic cost frontiers, we estimate controllable managerial cost inefficiency scores for all stock firms operating each year in 1994 to 2000. In a second stage, we use these scores to examine correlates of takeovers, focusing on cost inefficiency. For takeovers by banks, we find a significant negative relationship between cost inefficiency and takeover, suggesting an exit of more cost efficient firms from the thrift industry during this period. However, takeovers by thrifts are associated with other characteristics

Managerial Stock Ownership As A Corporate Control Device: When Is Enough, Enough?

It has long been accepted that managerial stock ownership, beyond some range of possible entrenchment, can be an effective means of aligning the interests of professional managers with those of a firm’s outside owners to the benefit of firm performance. In this paper, we offer evidence on the effectiveness of managerial stock ownership as a corporate control device by analyzing the behavior of 81 thrift institutions operating over the six-year period, 1989-1994. Based on the estimation of stochastic cost and profit frontiers, as well as other performance measures, our results suggest that managerial stock ownership provides an effective corporate control device. However, this device is only effective as managerial holdings surpass about 33% of outstanding shares for improvements in cost efficiency and about 40% for profit efficiency

Managerial Stock Ownership As A Corporate Control Device: When Is Enough, Enough?

It has long been accepted that managerial stock ownership, beyond some range of possible entrenchment, can be an effective means of aligning the interests of professional managers with those of a firm’s outside owners to the benefit of firm performance. In this paper, we offer evidence on the effectiveness of managerial stock ownership as a corporate control device by analyzing the behavior of 81 thrift institutions operating over the six-year period, 1989-1994. Based on the estimation of stochastic cost and profit frontiers, as well as other performance measures, our results suggest that managerial stock ownership provides an effective corporate control device. However, this device is only effective as managerial holdings surpass about 33% of outstanding shares for improvements in cost efficiency and about 40% for profit efficiency

U.S. Public Becoming Less Religious: Modest Drop in Overall Rates of Belief and Practice, but Religiously Affiliated Americans Are as Observant as Before

Is the American public becoming less religious? Yes, at least by some key measures of what it means to be a religious person. An extensive new survey of more than 35,000 U.S. adults finds that the percentages who say they believe in God, pray daily and regularly go to church or other religious services all have declined modestly in recent years.But the Pew Research Center study also finds a great deal of stability in the U.S. religious landscape. The recent decrease in religious beliefs and behaviors is largely attributable to the "nones" -- the growing minority of Americans, particularly in the Millennial generation, who say they do not belong to any organized faith. Among the roughly three-quarters of U.S. adults who do claim a religion, there has been no discernible drop in most measures of religious commitment. Indeed, by some conventional measures, religiously affiliated Americans are, on average, even more devout than they were a few years ago.The 2014 Religious Landscape Study is a follow-up to an equally extensive survey on religion in America, conducted in 2007. An initial report on the findings from the 2014 study, released in May 2015, described the changing size and demographic characteristics of the nation's major religious groups. This report focuses on Americans' religious beliefs and practices and assesses how they have changed in recent years

A Reassessment Of The Excess Return Phenomenon For Initial Public Offerings Of Common Stock

This study examines the relationship between underpricing for new issues of common stock and issue size (offer price and number of shares) after controlling for an issues risk. Both risk and offer price are found to be significant factors in explaining underpricing. Offer price dominates as an explanatory variable in cold issue markets, while risk dominates in hot issue markets

Regulatory Regimes and Takeovers of U.S. Thrifts

This paper examines the effect of regulatory regime changes on the attributes of acquired thrifts for periods of stringency in 1990 to 1993, and deregulation in 1994 to 2000, with the removal of significant impediments for bank takeovers of thrifts. We test a regime change hypothesis that predicts a more effective takeover market in the later regime. Consistent with the hypothesis, we find bank acquirers to engage in diverse motivations for takeovers in the later regime, including revenue turnaround motives, allowing discipline of profit inefficient firms. The results suggest greater takeover discipline in the later regime, but also suggest a complimentary role for regulatory discipline, with acquirers avoiding more cost inefficient and risky thrifts. In contrast in the early regime, regulatory concerns for building up capital dominate acquisition decisions.Regulatory Regimes, Thrifts, Takeovers, Profit and Cost Efficiency

Director tenure and the compensation of bank CEOs

Purpose – The purpose of this paper is to examine how board tenure affects the compensation of CEOs using a sample of 93 publicly traded US banks. Design/methodology/approach – The paper proposes a CEO allegiance hypothesis whereby long-term relationships with executives and other directors will shift allegiance from shareholders to executives vs a more traditional expertise hypothesis that predicts superior monitoring of executives by directors with longer tenure. A generalized least squares regression methodology is used to examine the relationship between CEO compensation and outside director tenure. Findings – For the full sample, board tenure variables were found to be insignificant. However, when examining a subsample of firms with CEO tenure of greater than six years or more, the relationship between CEO pay and the median tenure of outside directors becomes positive, supporting a CEO allegiance hypothesis. Research limitations/implications – On a caveat, since this study relies on data for large bank holding companies over a short period of time, further research is needed to determine if the results carry over to a broader sample of firms and across time. Practical implications – The results suggest that the independence of outside directors may be compromised when they serve for longer tenure periods together with the same CEO; an important consideration for better corporate governance. Originality/value – The study provides a unique examination of outside director independence from the perspective of board tenure and the long-term relationships with executives and other directors that may result in allegiance shifts away from shareholders and towards managers.Banking, Chief executives, Corporate governance, Regulation, Remuneration, United States of America