BUSI 4500 Study Guide - Quiz Guide: Proxy Statement, Abnormal Return, Carl Icahn
7 May 2018
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Article
1. Impact of anti-takeover amendments (ATA) on corporate performance, Akhibe
and Madura (1996)
• Examine the LT share price performance of firms that implement anti-
takeover amendments. And try to explain such performance.
• Sample: 346 US firms,
• Results: valuation effects of -13.55% after 3-years and of -23.12% after 7-
years.
• Methodology
• Monthly abnormal returns:
• E= return with takeover – no takeover)- beta
• Betas are measured during the pre-amendment period
• Dummy variable
• firms risk may shift at the long-run
• Theta represent risk-loadings, D: dummy=1 after
adoption of the pill and 0 otherwise
• Result: no significant change in risk after
amendment
• Cumulative abnormal return
• Test the immediate market reaction rep reliable
signal of LT performance
• Cross sectional analysis
• INSID: proportion of insider stock holding at firm
• NSTIT: proportion of institutional stock holdings at
• FAIR: 1 for fair-price amendment
• SUPER: 1 for supermajority rule
• BOARD: 1 for classified board provision
• Result
• + : LT valuation effect vs share price response
• - : ATA effect vs large portion of insider holding
• + : ATA effect vs large portion of institutional
holding
• + : ATA effect vs fair price & supermajority provision
amendments
• Conclusion: antitakeover amendments adversely affect corporate
performance. LT performance following amendments is related to
insider holdings, institutional holdings, and the type of
amendments
2. Chief Executive Compensation: An Empirical Study of Fat Cat CEOs,
Takming et al. (2013)
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Document Summary
Article: impact of anti-takeover amendments (ata) on corporate performance, akhibe and madura (1996, examine the lt share price performance of firms that implement anti- takeover amendments. : ata effect vs large portion of insider holding holding: + : ata effect vs fair price & supermajority provision amendments, conclusion: antitakeover amendments adversely affect corporate performance. Lt performance following amendments is related to insider holdings, institutional holdings, and the type of amendments: chief executive compensation: an empirical study of fat cat ceos, Takming et al. (2013) tests the determinants of executive compensation with a focus on the (cid:498)fat cat problem(cid:499: hyphotheses. Sample: 903 us firms, 2007-2010: + : ceo compensation vs ceo tenure, + : ceo compensation vs ceo age, + : ceo compensation vs board size. : ceo compensation vs ceo shareholdings: methodology (panel data estimation) i t. Log firmsize i t firmperformancei t year t.
