Mergers, executive risk reduction and stockholder wealth

Loderer, Claudio; Lewellen, Wilbur; Rosenfeld, Ahron (1989). Mergers, executive risk reduction and stockholder wealth. Journal of Financial and Quantitative Analysis, 24(4), pp. 459-472. Cambridge University Press 10.2307/2330979

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Among the possible consequences of agency problems between owners and managers is a tendency by managers to make investment decisions for their firms that are deliberately aimed at reducing firm risk, as a means to control managers' personal wealth risk. The literature has suggested that such behavior may occur to the detriment of shareholder wealth, and that mrgers may be a particular class of investment decisions for which the behavior would be observable. We test these hypotheses empirically, but find no evidence from our merger sample that risk reduction for the aqquiring firm is the typical outcome nor that, when it occurs, it is differentially costly for shareholders.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Financial Management

UniBE Contributor:

Loderer, Claudio and Rosenfeld, Ahron

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0022-1090

Publisher:

Cambridge University Press

Language:

English

Submitter:

Karin Dolder

Date Deposited:

24 Jan 2014 09:21

Last Modified:

05 Dec 2014 02:32

Publisher DOI:

10.2307/2330979

BORIS DOI:

10.7892/boris.39542

URI:

https://boris.unibe.ch/id/eprint/39542

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