The governance and control of voluntary corporate spin-offs

Article Abstract:

The design of efficient internal corporate control systems is examined in terms of how it is affected by a voluntary corporate restructuring. It is hypothesized that efficient internal controls are put in place in spun-off companies. To test this proposition, a study is made of the post-restructuring internal control mechanisms of 78 business organizations that were voluntary spun off between 1972 and 1987. The results support the hypothesis. They indicate that CEO selection, executive compensation management, the selection of the members of the board of directors and the formation of their compensation committees are ex ante efficient. However, no strong evidence is found linking these practices to the observed positive market reactions to restructuring announcements.

Corporate governance, Organizational change

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Mergers, acquisitions, and the pruning of managerial deadwood

Article Abstract:

The role of acquisitions and mergers in the turnover of established and inefficient managers was investigated. The performance-turnover relationships of 102 target companies, 77 out of the 102 parent companies, and a control group of 75 companies were investigated. The results indicated that turnover in the target companies was higher than average for the first two years after an acquisition or merger. Previous performance and subsequent turnover were unrelated. Turnover rates in target companies during the first year after an acquisition or merger were related to relatively poor performance records for the parent companies, and turnover rates during the second year were related to relatively good performance records for the parent companies.

Causes of

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Doing a deal: merger and acquisition negotiations and their impact upon target company top management turnover

Article Abstract:

The effects of corporate mergers and acquisition discussions on target company management turnover are examined. The research concentrates on seven attributes of acquisition transactions and three attributes of the companies themselves. Results indicate that when an unrelated company that has previously been a takeover target agrees to be acquired by another company, management turnover is likely to be unusually high four years later. The impact of negotiations is also evident three years after the acquisition when turnover rates are also sizeable.

Human resource management, Management research

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