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Managerial entrenchment and firm value: a dynamic perspective

Version 2 2024-06-03, 14:15
Version 1 2015-12-15, 10:40
journal contribution
posted on 2024-06-03, 14:15 authored by X Chang, Hong Feng ZhangHong Feng Zhang
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.

History

Journal

Journal of financial and quantitative analysis

Volume

50

Pagination

1-21

Location

Cambridge, Eng.

ISSN

0022-1090

eISSN

1756-6916

Language

eng

Publication classification

C1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2015, Michael G. Foster School of Business, University of Washington

Issue

5

Publisher

Cambridge University Press (CUP)