期刊
JOURNAL OF FINANCIAL ECONOMICS
卷 122, 期 3, 页码 431-455出版社
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2016.08.002
关键词
Risk; Managerial preferences; Agency conflicts; Acquisitions
资金
- Brandywine Global Investment Management Research Fellowship
- Rodney L. White Center for Financial Research
This article examines managers' incentive to play it safe. We find that, after managers are insulated by the adoption of an antitakeover law, they take value-destroying actions that reduce their firms' stock volatility and risk of distress. To illustrate one such action, we show that managers undertake diversifying acquisitions that target firms likely to reduce risk, have negative announcement returns, and are concentrated among firms with managers who gain the most from reducing risk. Our findings suggest that instruments typically used to motivate managers, such as greater financial leverage and larger ownership stakes, exacerbate risk-related agency challenges. (C) 2016 Elsevier B.V. All rights reserved.
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