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Full-Text Articles in Law

Classified Boards And Firm Value, Michael D. Frakes Jan 2007

Classified Boards And Firm Value, Michael D. Frakes

Faculty Scholarship

Classified boards constitute one of the most potent takeover defenses for U.S. firms today. However, as with takeover defenses more generally, economic theory offers an ambiguous prediction as to the effect that classified boards have on bottom-line firm value. A resolution of this ambiguity will require sound and convincing empirical methodology. In an effort to address limitations in the existing empirical literature, this article approaches the relationship between corporate governance and firm value while taking various measures to account for unobserved sources of heterogeneity across firms. Using the instrumental variables model developed by Hausman and Taylor, I find evidence ...


Churn, Baby, Churn: Strategic Dynamics Among Dominant And Fringe Firms In A Segmented Industry, John M. De Figueiredo, Brian S. Silverman Jan 2007

Churn, Baby, Churn: Strategic Dynamics Among Dominant And Fringe Firms In A Segmented Industry, John M. De Figueiredo, Brian S. Silverman

Faculty Scholarship

This paper integrates and extends the literatures on industry evolution and dominant firms to develop a dynamic theory of dominant and fringe competitive interaction in a segmented industry. It argues that a dominant firm, seeing contraction of growth in its current segment(s), enters new segments in which it can exploit its technological strengths, but that are sufficiently distant to avoid cannibalization. The dominant firm acts as a low-cost Stackelberg leader, driving down prices and triggering a sales takeoff in the new segment. We identify a “churn” effect associated with dominant firm entry: fringe firms that precede the dominant firm ...