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Dissertation Information for Gerald Fredrick Davis

- Gerald Fredrick Davis

- Ph.D.

- Business

- Stanford University (USA) (1990)

- None

- None

MPACT Status: Incomplete - Not_Inspected

Title: Agents without principles? The spread of the poison pill takeover defense through the intercorporate network

Abstract: "This research investigates the factors associated with the adoption of the poison pill by Fortune 500 corporations between July 1984 and August 1989. Boards of directors adopt the pill to make takeover without board approval more difficult. This study combines economic and sociological approaches to firm behavior with dynamic statistical techniques in accounting for the progression of the pill from deviant innovation to norm of corporate governance.

The poison pill's spread is traced to a diffusion process in which firms that shared board members (interlocked) with other firms that had a pill were quicker to adopt one themselves. Firms with an extremely large number of interlock ties, however, were less likely to adopt. Diffusion was not simply imitative, as several firm-level factors strongly affected firms' propensity to adopt. Management stock ownership and concentrated ownership decreased firms' adoption rate. Larger firms and those with high market-to-book ratios also adopted at a lower rate. Firms that had golden parachute contracts, which compensate managers following a change in control, were more likely subsequently to adopt, as were firms with boards composed of fewer of the firm's executives. Higher institutional ownership and prior adoption of a shark repellent also increased the adoption rate.

In contrast to the adoption of poison pills and antitakeover charter amendments, the adoption of golden parachute contracts bore no relation to interlocks, although the other factors associated with having a golden parachute were similar to those associated with having a poison pill.

I conclude by arguing that managerialism has been limited but not eliminated by the construction of a market for large takeovers in the 1980s. Managers of most large firms are still in a position to take actions inconsistent with the interests of the firm's ownership, contrary to the claims of agency theory, and boards of directors are more accurately described as devices to articulate organizations with their environment rather than agents of their shareholder principals. Issues surrounding corporate ownership and control are best examined under the broad framework of organization theory."

MPACT Scores for Gerald Fredrick Davis

A = 0
C = 1
A+C = 1
T = 0
G = 0
W = 0
TD = 0
TA = 0
calculated 2008-01-31 06:30:44

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Students under Gerald Fredrick Davis

- None

- Nathaniel S. Bulkley - University of Michigan, Ann Arbor (2006)