| Paper Number | KCB-WP-2020-015 |
|---|---|
| Title | Does Product Market Competition Affect Corporate Governance? Evidence from Corporate Takeovers |
| Title(Other) | |
| Author | Frederick Dongchuhl Oh ; Sean Seunghun Shin |
| Publisher | KAIST College of Business |
| Abstract | We examine the extent to which shareholders strategically allow a weak governance structure in response to increasing competition pressures in the product market. We treat acquisitions by rival firms as shocks that increase threats in a competitive product market. We find that firms adopt greater entrenchment provisions when there are greater competition threats. Moreover, firms with high institutional ownership─especially by dedicated investors─and board independence within the compensation committee are particularly aggressive, which is consistent with our theory that aggressive behavior represents a strategic decision by shareholders. Finally, we find positive relationship between the adoption of entrenchment provisions and firm’s future performance, but only for the adoption under relatively severe competitive pressures. |
| Full-Text | * Full-Text 다운로드는 경영대학 학생에게만 제공되고 있습니다. |