Managerial entrenchment and firm value: a dynamic perspective

Chang, Xin and Zhang, Hong Feng 2015, Managerial entrenchment and firm value: a dynamic perspective, Journal of financial and quantitative analysis, vol. 50, no. 5, pp. 1083-1103, doi: 10.1017/S0022109015000423.

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Title Managerial entrenchment and firm value: a dynamic perspective
Author(s) Chang, Xin
Zhang, Hong Feng
Journal name Journal of financial and quantitative analysis
Volume number 50
Issue number 5
Start page 1083
End page 1103
Total pages 21
Publisher Cambridge University Press (CUP)
Place of publication Cambridge, Eng.
Publication date 2015-11-24
ISSN 0022-1090
1756-6916
Summary We examine the impact of managerial entrenchment on firm value using a dynamic model with firm fixed effects. To estimate the model, we employ the long-difference technique, which is shown by our simulation to deliver the least biased estimates. Based on a large sample of U.S. companies, we document a significantly negative and causal effect of managerial entrenchment on firm value after taking into account omitted variables, reverse causality, and highly persistent endogenous variables. Additional analysis suggests that the causality running from managerial entrenchment to firm value is more pronounced than that for reverse causality.
Language eng
DOI 10.1017/S0022109015000423
Field of Research 150299 Banking, Finance and Investment not elsewhere classified
1502 Banking, Finance And Investment
Socio Economic Objective 970115 Expanding Knowledge in Commerce
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, Michael G. Foster School of Business, University of Washington
Persistent URL http://hdl.handle.net/10536/DRO/DU:30080264

Document type: Journal Article
Collections: Department of Finance
2018 ERA Submission
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