This master thesis investigate the influence of board monitoring on the market’s response to corporate antitakeover amendment proposals in particular to classified boards. Board monitoring is measured using board composition, board ownership structure, and leadership structure. The stock price reaction to antitakeover amendment proposals of classified boards is negatively related to the portion of inside and affiliated outside directors on the board. Moreover, for companies in which the CEO also is the chairman of the board, the response turn out to be more negative since inside and affiliated outside directors on the board increase their stake on the firm and their proportional number on the board makes them more entrench to the firm. On the …show more content…
Paul in his 2007 paper also indicates the similar argument with McWilliams and Sen (1998). In her paper, she investigates the role of corporate boards following large declines in share value surrounding acquisition announcements. She concludes that firms with independent boards are less likely to complete the value-decreasing bids, suggesting that boards influence corporate responses to information in stock prices. Board independence is also associated with unusually high frequencies of asset restructuring for bids that are completed, suggesting that independent boards promote restructuring in mergers the market believes are difficult to integrate (Paul, 2007). Another paper that supports the independent board argument is from Kolasinski and Li (2013). They provided evidence that strong and independent boards help overconfident chief executive officers (CEOs) avoid honest mistakes when they seek to acquire other …show more content…
Faleye (2007) argue that classified boards (which is one of the form of antitakeover amendments) destroy value by entrenching management and reducing director effectiveness. He concludes that classified boards significantly insulate management from market discipline, thus suggesting that the reduction in value is due to managerial entrenchment and diminished board accountability. However on the contrary, the paper from Thomas W. Bates, David A. Becher, and Michael L. Lemmon (2008) stated that although board classification does indeed reduce the likelihood of receiving a takeover bid, the economic effect of bid deterrence on the value of the firm is quite small which leads them to conclude that the evidence from their resulted research is inconsistent with the conventional wisdom that board classification is an antitakeover device that facilitates managerial entrenchment (Bates, Becher, and Lemmon,
Have you ever wondered what would happen if your worst fears became reality? For the founding father and crafters of the U.S. Constitution those fears have come to roost. What was originally designed to be the foundation of our country, and the law of the land; has now been amended out of existence. The ratification of the 17th Amendment changed the country’s political landscape and weakened the U.S. Constitution by allowing Senators to be directly elected by popular vote instead of by the legislatures of the states they represent. This Amendment was a byproduct of the Democratic Progressive movement. It was believed by some that it would correct the procedural issues and perceived political corruption associated with the election of state Senators to Congress. The Amendment was touted as a permanent solution to these problems, and would ultimately result in making politics and the political process more accessible to the average citizen. However, the 17th Amendment has failed to deliver on its promises, and has produced a Senate that is even less responsive to voters, even more corrupt with campaign contributions and allegiances to large corporations and special interest groups, and fails to truly represent the interests of the states. Moreover, the 17th Amendment removed a crucial check and balance that was purposely designed into the Constitution in order to preserve state’s rights and prevent the abuse of federal powers. The 17th Amendment should be repealed in order to restore the intended power and sovereignty of the state, preserve the original federal distributive powers system, and to prevent the spread of abusive federal powers.
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
Health care has always been an important issue within the United States, resulting in hours of grueling conversations and arguments to better that which we already have. Most often words on the vine dictate that our health care is never going to improve if the government continues as they are with money hungry politicians. What better way to solve the issue of health care in the United States that to put one Sacramento politician in charge of the approval of all medical insurance and such...or so one may think. Proposition 45 is currently a big debate among the possibly affected states within America, a heated debate to be noted. Most of the people who have joined this debate are in unison with their votes of NO on Prop 45, and it is not
The 19th amendment was ratified on August 18, 1920 and gifted women the right to vote, also known as woman suffrage. There are several reasons for this amendment including, campaigns and civil disobedience. These are not the only reasons, but are the main ones. H.L. Simpson, a suffrage worker, “addressed the assembly on May 21, 1917”(Swathi). Her speech “led to groups and clubs being formed in support of the suffrage movement”(Swathi). These campaigns are what led to the ratification, because without them - the 19th amendment probably wouldn’t exist and women wouldn’t have the right to vote.
This voter guide covers Proposition 55, Extension of the Proposition 30 Income Tax Increase. Some pros are that it only will affect the top 1.5% of Californians and will not raise any current taxes. Some cons are that it will extend an increase that was meant to be temporary and that it is not necessary considering the projected 11.5 billion dollars in budget reserves at the end of the 2016-2017 fiscal year. My recommendation is to vote in opposition of this proposition because doing so will promote the growth of small businesses, jobs, and the economy. It would also be more beneficial to optimize our current budget instead of depending on taxing the rich.
After the ratification of the nineteenth amendment, women gained the right to vote in the United States. The amendment also changed women in the United States in different ways. After it was ratified, women were not only gained the right to vote, but began to be a big part of the work force and also made huge strides socially. Women began to make their presence known in the United States.
... getting emotional. However, he acknowledges that experience has helped him to avoid situations where he would make these mistakes and to be more cognizant of how and when these mistakes occur. Overall, Mr. Dinino and KBD Investments are excellent examples of how power, influence and negotiation can lead to success
As discussed above, early research has documented the negative effects of managerial overconfidence. Naturally, the paradox of firms constantly hiring overconfident CEOs emerges. Instead of making distortionary investments compare to rational CEOs, overconfident CEOs may also exhibit some positive contributions to firms’ value. However, the existing studies discussed the benefits to shareholders of having an overconfident CEO are only confined to the moderate level of the overconfidence.
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
The debate whether diversity is beneficial to corporate governance or not has persisted over the years. In this context, the concept of diversity relates to boardroom composition and the wide-ranging blend of characteristics, expertise, and attributes supplied by individual board members (Grosvold, Brammer and Rayton, 2007, p. 344). What is more, diversity in corporate boards of directors can assume a variety of forms, counting individual demographics such as, nationality, race, ethnicity, and gender (Singh, Terjesen, and Vinnicombe, 2008, p.48). Boardroom diversity in listed companies is dictated by an array of diverse factors, including profitability, company size, as well as the size of the board (the number of non-executive and executive directors) (Grosvold, Brammer and Rayton, 2007, p.346). In listed companies, the board of directors usually serves at least four significant roles i.e. controlling as well as monitoring managers, providing counsel and information to managers, ensuring conformity with relevant laws as well as regulations, plus connecting the corporation to the external business environment (Carter et al. 2010, p.398).
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
The board membership, irrespective of executive or non executive membership, is very crucial in the governance and management of the company. However, as the duties and responsibilities of directors vary according to their type of directorship; the rewards should also match the responsibilities carried out and be in line with the performance shown over period of time.
There has been a drive towards corporate governance which has been driven by a greater need for shareholder protection. If investors feel well cushioned then there is a higher chance that t...
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.