The Effect of Regulatory Oversight on Internal and External Mechanisms to Change Corporate Control

Douglas O. Cook, Arthur Hogan and Robert Kieschnick

Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania

Abstract: The authors study the effects of regulatory oversight on internal and external mechanisms to change corporate control by examining all thrifts that were publicly traded in 1990 for significant influences on whether these thrifts continued as public concerns, were acquired or were censured by the OTS in 1991. They further consider what happens to the companies' CEOs and why they are replaced if they are replaced. The evidence examined suggests that regulatory oversight substitutes for the disciplinary role of the external market for corporate control and for board discipline, except when boards are free from external discipline. Consequently, the study's results provide support for key effects in Hirschleifer and Thakor's (1992) model of disciplinary takeovers and board dismissals in unregulated industries.

Date: 1995-09
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Persistent link: https://EconPapers.repec.org/RePEc:wop:pennin:95-23

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