Tunyi, A. orcid.org/0000-0002-5761-931X, Ntim, C. and Danbolt, J. (2019) Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood. International Review of Financial Analysis, 62. pp. 1-20. ISSN 1057-5219
Abstract
Using combinations of accounting and stock market performance measures, we advance a comprehensive multidimensional framework for modelling management performance. This framework proposes “poor” management, “myopia”, “hyperopia” and “efficient” management, as four distinct attributes of performance. We show that these new attributes align with, and extend, existing frameworks for modelling management short-termism. We apply this framework to test the management inefficiency hypothesis using UK data over the period 1988 to 2017. We find that takeover likelihood increases with “poor” management and “myopia”, but declines with “hyperopia” and “efficient” management. Our results suggest that managers who focus on sustaining long-term shareholders' value, even at the expense of current profitability, are less likely to be disciplined through takeovers. By contrast, managers who pursue profitability at the expense of long-term shareholder value creation are more likely to face takeovers. Finally, we document the role of bidders as enforcers of market discipline.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2019 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/BY/4.0/). |
Keywords: | Hyperopia; Inefficient management hypothesis; Management performance; Myopia; Takeovers |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 21 Jan 2019 09:36 |
Last Modified: | 25 Nov 2021 09:20 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.irfa.2019.01.004 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:140706 |