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Outside Director-Shareholder Agency Conflicts: Evidence From Bank Consolidation, James Tompkins, Robert Hendershott
Outside Director-Shareholder Agency Conflicts: Evidence From Bank Consolidation, James Tompkins, Robert Hendershott
James Tompkins
Purpose – Takeovers create a potential conflict of interest between target shareholders and directors. While mergers generally create value for the target shareholders, their directors will typically lose their board seats and likely face a financial loss or loss of prestige. The purpose of this paper is to examine evidence to support or refute that directors may act in their own best interests at the expense of shareholders. Design/methodology/approach – The authors reason that if directors act in their own best interests, then acquiring firms will seek targets with older board members who are closer to director retirement and are …
A Modified Version Of The Lewellen And Badrinath Measure Of Tobin's Q, Darrell Lee, James Tompkins
A Modified Version Of The Lewellen And Badrinath Measure Of Tobin's Q, Darrell Lee, James Tompkins
James Tompkins
Lewellen and Badrinath (1997) propose a superior method of measuring Tobin's Q. Unfortunately, their method is prone to a high percentage of missing observations and results in selecting samples of larger and more mature firms with lower Q statistics. A slight modification is proposed that preserves the appeal of their method, yet almost doubles the sample size, avoids sampling problems, and is statistically indistinguishable from their Q measure. In addition, a step in the Lewellen and Badrinath Q calculation is clarified, which was inadvertently omitted in their explanation, and, if left undone, can result in downward-biased measures of Q.