Topic
Empire-building
About: Empire-building is a research topic. Over the lifetime, 7 publications have been published within this topic receiving 361 citations.
Papers
Posted Content•
TL;DR: In this paper, the basic allocation of power between boards and shareholders in publicly traded companies with dispersed ownership is reconsidered, and shareholders should be able to adopt provisions that give them additional power to intervene, down the road, in specific business decisions.
Abstract: This paper reconsiders the basic allocation of power between boards and shareholders in publicly traded companies with dispersed ownership. U.S. corporate law has long precluded shareholders from initiating any changes in the company's basic governance arrangements. I show, and support with empirical evidence, that shareholders' existing power to replace directors is insufficient to secure the adoption of value-increasing governance arrangements that management disfavors. I put forward an alternative regime that would allow shareholders to initiate and adopt rules-of-the-game decisions to change the company's charter or state of incorporation. Providing shareholders with such power would improve over time to improve all corporate governance arrangements, largely by inducing management to initiate value-increasing changes and without shareholders' having to exercise their power to intervene.Furthermore, I argue that, as part of their power to amend governance arrangements, shareholders should be able to adopt provisions that give them additional power to intervene, down the road, in specific business decisions. Power to intervene in game-ending decisions (to merge, sell all assets, or dissolve) could address management's bias in favor of the company's continued existence. Power to intervene in scaling-down decisions (to make cash or in-kind distributions) could address management's tendency to retain excessive funds and engage in empire-building. Shareholders' ability to adopt, when necessary, provisions that give themselves additional power to intervene could thus produce benefits in many companies. A regime with shareholder power to intervene, I show, would address governance problems that have long troubled legal scholars and financial economists. These benefits would result mainly from inducing management to act in ways that better serve shareholder interests and without shareholders' having to exercise their power to intervene. I also discus how such a regime could best be designed to address concerns that supporters of management insulation could raise; for example, to allay such concerns, shareholder-initiated changes in governance arrangements could be adopted only if they enjoy shareholder support in two consecutive annual meetings. Finally, examining a wide range of possible objections, I conclude that they do not provide a good basis for opposing the proposed increase in shareholder power.
400 citations
TL;DR: The concrete lessons of recent history have helped us to appreciate the paramount importance of the political preconditions of social and economic development in the new states as discussed by the authors, and the basic problem of political stability must be solved before all others, or everything else may be in vain.
Abstract: The concrete lessons of recent history have helped us to appreciate the paramount importance of the political preconditions of social and economic development in the new states. The basic problem of political stability must be solved before all others—or everything else may be in vain. For this reason, some of the scholarly attention that used to be focused on social and economic development has shifted to political organization and has given prominence to terms such as “nation-building,” “political culture,” and “democratization.”
238 citations
TL;DR: The authors explored whether and how political connections affect the likelihood of completing a cross-border M&A deal for Chinese publicly listed, but privately-owned enterprises and the resulting firm performance.
147 citations
TL;DR: For instance, this paper pointed out that political geography had become a "moribund backwater" and pointed out the fact that the focus of political geography was no longer on economic expansion, but on political expansion.
30 citations
TL;DR: The authors explored whether and how political connections affect the likelihood of completing a cross-border M&A deal for Chinese publicly listed, but privately-owned enterprises and the resulting firm performance.
Abstract: This paper explores whether and how political connections affect the likelihood of completing a cross-border M&A deal for Chinese publicly listed, but privately-owned enterprises (POEs) and the resulting firm performance. In line with our proposed political connection trade-off theory, we find that POEs with politically connected top managers are more likely to complete a cross-border M&A deal than POEs with no such connections, but that this comes at the cost of negative announcement returns and subsequent lower accounting performance. These findings support the idea that politically connected top managers engage in “political empire building” behavior at the cost of shareholders’ wealth.
23 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2018 | 1 |
| 2017 | 1 |
| 2015 | 1 |
| 2011 | 1 |
| 2003 | 1 |
| 1984 | 1 |