The Effect of Poison Pill Adoptions and Court Rulings on Firm Entrenchment

We challenge a common presumption that poison pills and two Delaware case rulings in 1995 validating such pills materially entrench firms. Based on unsolicited takeover attempts from 1985 to 2009, we find that poison pills enhance takeover premiums, but do not reduce completion rates. Furthermore, the 1995 Delaware rulings affected neither the use of poison pills among the targets, the effectiveness of the pills that were used, the completion rate of the takeover attempts, nor the takeover premiums

Do Stock Options Overcome Managerial Risk Aversion? Evidence from Exercises of Executive Stock Options

We report that the probability that executives exercise options early decreases with the volatility of the underlying stock return. We interpret this to mean that executives’ subjective option value increases with volatility and that option grants increase executives’ risk appetite. Further decomposition reveals that the results are most pronounced for idiosyncratic volatility, consistent with our conjecture that executives believe they can better predict or influence the resolution of idiosyncratic uncertainty than systematic uncertainty and, thus, favor the former

On the relation between corporate social responsibility and financial performance

Research Summary This study reexamines the relation between corporate social responsibility (CSR) and financial performance by benchmarking firms against industry peers in a given year to identify best-in-class and worst-in-class firms. We also address distributional issues when using CSR ratings (clustering of CSR scores around the median and material differences across industries and time) and financial performance ratios (the possible influence of extreme values). We find that the best-in-class firms outperform their industry peers in terms of operating performance and have higher relative market valuations (Tobin's Q). When we control for endogeneity, we find that the significant relation between operating performance and CSR categories disappears, calling into question whether this relation is causal. However, we continue to find that best-in-class firms receive higher relative market valuations than industry peers. Managerial Summary The conflicting evidence on the relation between CSR and firm performance may influence a manager's decision to invest in CSR activities and an investor's decision to invest in a firm. Our research provides managers and investors with important implications regarding the value of relative benchmarking. Managers should understand that expectations of CSR performance evolve over time and that investors place higher valuations on the best-in-class CSR firms within an industry

Telomere Lengths, Pulmonary Fibrosis and Telomerase (TERT) Mutations

mutations. mutation carriers demonstrate reduced life expectancy, with a mean age of death of 58 and 67 years for males and females, respectively. mutation have shorter telomere lengths than controls, demonstrating epigenetic inheritance of a shortened parental telomere length set-point

An analysis of the reincorporation decision: The evidence since 1980

This thesis examines the decision made by managers of publicly traded corporations to change the firm\u27s state of incorporation. Due to significant differences in state corporation laws, this action, referred to as \u27reincorporation,\u27 can materially alter the contractual relationships governing the firm. The apparent state competition in the market for corporate charters has led to competing viewpoints regarding why managers decide to reincorporate and how the resulting recontracting affects shareholders. On one hand, financial researchers contend that reincorporations are the product of managers acting to maximize contractual efficiency by relocating in jurisdictions with corporate laws that are better suited to firm characteristics. Alternatively, many argue that reincorporations are used as a vehicle to relax corporate governance mechanisms and insulate incumbent managers from the market for corporate control. In this analysis of reincorporations that occurred between 1980 and 1992, the evidence reveals that corporate managers offer a variety reincorporation motives. The shareholder wealth effects of the studied reincorporations are found to be dependent upon these motives. The findings lend situational support to both managerial entrenchment arguments and to contractual efficiency theories. In contrast to past research, the tests conducted here reveal that many reincorporations are harmful to securityholders. Over 3/5 of the sampled reincorporation proposals contained at least one antitakeover charter amendment, many of which were either bundled as a part of the reincorporation plan or come in the form of hidden amendments. When such reincorporations are passed for solely defensive purposes, shareholder wealth decreases by over 1.1%. Further, when these plans are passed in the presence of takeover threats, security prices decline by nearly 3%. The evidence also suggests that reincorporations can result in increased shareholder wealth. This is the case for those reincorporations conducted to take advantage of corporate laws that allow for limitations on director and officer liability. When such proposals are passed, shareholder wealth increases by nearly 1%. Further tests reveal that these reincorporations relaxed some of the constraints imposed by the crisis in the market for D&O liability insurance and assisted these firms in achieving increased levels of outside board representation