Does Corporate Governance Matter in Competitive Industries?

Xavier Giroud · Holger M. Mueller

73 citations0/0 files storedNational Bureau of Economic Research

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Auditing, Earnings Management, Governance Merger and Competition Analysis

Abstract

By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack.Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a significant drop in operating performance after the laws' passage, firms in competitive industries experience no significant effect.When we examine which agency problem competition mitigates, we find evidence in support of a "quiet-life" hypothesis.Input costs, wages, and overhead costs all increase after the laws' passage, and only so in non-competitive industries.Similarly, when we conduct event studies around the dates of the first newspaper reports about the BC laws, we find that while firms in non-competitive industries experience a significant stock price decline, firms in competitive industries experience a small and insignificant stock price impact.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 73 citations exist upstream.

References

2008Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches 1988The Theory of Industrial Organization 1991Earnings Management During Import Relief Investigations 1977An Inquiry into the Nature and Causes of the Wealth of Nations 1995Detecting Earnings Management.1971Industrial Market Structure and Economic Performance.2003Corporate Governance and Equity Prices 1989Theory of Industrial Organization.

Cited by

2006Competition and Private Benefits of Control 2012Corporate Governance and Development 2020Company Performance: Are Environmental, Social, and Governance Factors Important?2023Feedback and Contagion through Distressed Competition 2021Tobin’s Q as an Indicator of Firm Performance: Empirical Evidence from Manufacturing Sector Firms of Pakistan 2016Corporate Governance Effects on Firm Performance: a Literature Review

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.