An agency theory explanation of SEO underperformance: Evidence from dual-class firms

被引：8
|
作者：
Chaudhuri, Ranadeb [1 ]
Seo, Hoontaek [2 ]
机构：
[1] Oakland Univ, Dept Accounting & Finance, Rochester, MI 48309 USA
[2] Niagara Univ, Commerce Dept, New York, NY 14109 USA
来源：
JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY | 2012年 / 22卷 / 03期
关键词：
Seasoned equity offering; Dual-class stocks; Agency theory; MANAGERIAL DISCRETION; RETURNS;
D O I：
10.1016/j.intfin.2012.03.002
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
Using a sample of U.S. dual class companies, we empirically investigate the effects of the divergence between insiders' voting and cash flow rights on market reaction to seasoned equity offerings (SEOs) and long-run stock performance following SEOs. We find that SEO announcement returns and long-run stock performance following SEOs are negatively related to measures of the divergence between insiders' voting and cash flow rights. Our results support the view of agency theory as a plausible explanation of SEO underperformance. Misalignment of interests between insiders and outside shareholders can create managerial incentives to undertake value-destroying investments to extract private benefits, ultimately leading to a reduction in firm value. (C) 2012 Elsevier B.V. All rights reserved.
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页码：575 / 588
页数：14
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