Success and Failure in the Market for Corporate Control: Evidence from the Petroleum Industry

John W Byrd and William W Stammerjohan

The Financial Review, 1997, vol. 32, issue 4, 635-58

Abstract: A sample of firms from the oil industry is used to test whether managerial actions are consistent with the managerial entrenchment or shareholder interest hypothesis. While targeted firms have lower Q-ratios than non-targeted firms, not all low Q-ratio firms become targets. High levels of managerial stock ownership decrease the likelihood of a low Q-ratio firm being targeted. Managerial resistance to control events is associated with greater share price increases, but a lower likelihood of a control change occurring. Overall, the results are consistent with managers taking actions that protect their positions, possibly at shareholder expense. Copyright 1997 by MIT Press.

Date: 1997
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