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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Discipline or disruption?
T2 - stakeholder relationships and the effect of takeover threat
AU - Cen, Ling
AU - Dasgupta, Sudipto
AU - Sen, Rik
PY - 2016/10
Y1 - 2016/10
N2 - While a sizable literature suggests that firms benefit from vulnerability to takeovers because it reduces agency problems, the threat of takeovers can also impose ex ante costs on firms by adversely affecting relationships with important stakeholders, such as major customers. We find that when firms havecorporate customers as important stakeholders, an exogenous reduction in the threat of takeovers increases their ability to attract new customers and strengthens their relationships with existing customers, resulting in improvement in operating performance. The positive effect on operating performance is greater for suppliers that are likely to offer unique and durable products to their customers. Our results suggest a beneficial aspect of protection from takeovers when stakeholder relationships are important.
AB - While a sizable literature suggests that firms benefit from vulnerability to takeovers because it reduces agency problems, the threat of takeovers can also impose ex ante costs on firms by adversely affecting relationships with important stakeholders, such as major customers. We find that when firms havecorporate customers as important stakeholders, an exogenous reduction in the threat of takeovers increases their ability to attract new customers and strengthens their relationships with existing customers, resulting in improvement in operating performance. The positive effect on operating performance is greater for suppliers that are likely to offer unique and durable products to their customers. Our results suggest a beneficial aspect of protection from takeovers when stakeholder relationships are important.
KW - takeovers
KW - corporate governance
KW - product market relationships
KW - Business Combination Laws
U2 - 10.1287/mnsc.2015.2252
DO - 10.1287/mnsc.2015.2252
M3 - Journal article
VL - 62
SP - 2820
EP - 2841
JO - Management Science
JF - Management Science
SN - 0025-1909
IS - 10
ER -