Takeover Threats and Managerial Myopia

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Takeover Threats and Managerial Myopia

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Title: Takeover Threats and Managerial Myopia
Author: Stein, Jeremy C.
Citation: Stein, Jeremy C. 1988. Takeover threats and managerial myopia. Journal of Political Economy 96(1): 61-80.
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Abstract: This paper examines the familiar argument that takeover pressure can be damaging because it leads managers to sacrifice long-term interests in order to boost current profits. If stockholders are imperfectly informed, temporarily low earnings may cause the stock to become undervalued, increasing the likelihood of a takeover at an unfavorable price; hence the managerial concern with current bottom line. The magnitude of the problem depends on a variety of factors, including the attitudes and beliefs o f shareholders, the extent to which corporate raiders have inside information, and the degree to which managers are concerned with retaining control of their firms.
Published Version: http://dx.doi.org/10.1086/261524
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3708937
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