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Discipline or disruption?: stakeholder relationships and the effect of takeover threat

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Discipline or disruption? stakeholder relationships and the effect of takeover threat. / Cen, Ling; Dasgupta, Sudipto; Sen, Rik.

In: Management Science, Vol. 62, No. 10, 10.2016, p. 2820-2841.

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Cen, Ling ; Dasgupta, Sudipto ; Sen, Rik. / Discipline or disruption? stakeholder relationships and the effect of takeover threat. In: Management Science. 2016 ; Vol. 62, No. 10. pp. 2820-2841.

Bibtex

@article{f4e7eddb18f7441ab156ba3c97a3820c,
title = "Discipline or disruption?: stakeholder relationships and the effect of takeover threat",
abstract = "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.",
keywords = "takeovers, corporate governance, product market relationships, Business Combination Laws",
author = "Ling Cen and Sudipto Dasgupta and Rik Sen",
year = "2016",
month = oct
doi = "10.1287/mnsc.2015.2252",
language = "English",
volume = "62",
pages = "2820--2841",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "10",

}

RIS

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 -