The end of the corporate life cycle

This paper asks how takeover and failure hazards change as listed firms get older. The hypothesis is that they increase because firms gradually run out of growth opportunities. We find the opposite. Both takeover and failure hazard drop significantly with age. The decline in takeover hazard can be explained with Loderer, Stulz, and Waelchli’s (2013) “buggy whip makers” hypothesis: Because old firms are comparatively well-managed and are affected by limited agency problems, on average, they offer little value added potential to acquirers. Failure hazard drops because to learning. The results are robust to various alternative interpretations and cannot be explained by unobserved heterogeneity. While hazards decline with age, they do not go to zero. This explains why, eventually, all listed firms disappear

The end of the corporate life cycle

This paper asks how takeover and failure hazards change as listed firms get older. The hypothesis is that they increase because firms gradually run out of growth opportunities. We find the opposite. Both takeover and failure hazard drop significantly with age. The decline in takeover hazard can be explained with Loderer, Stulz, and Waelchli’s (2013) “buggy whip makers” hypothesis: Because old firms are comparatively well-managed and are affected by limited agency problems, on average, they offer little value added potential to acquirers. Failure hazard drops because to learning. The results are robust to various alternative interpretations and cannot be explained by unobserved heterogeneity. While hazards decline with age, they do not go to zero. This explains why, eventually, all listed firms disappear

The end of the corporate life cycle

This paper asks how takeover and failure hazards change as listed firms get older. The hypothesis is that they increase because firms gradually run out of growth opportunities. We find the opposite. Both takeover and failure hazard drop significantly with age. The decline in takeover hazard can be explained with Loderer, Stulz, and Waelchli’s (2013) “buggy whip makers” hypothesis: Because old firms are comparatively well-managed and are affected by limited agency problems, on average, they offer little value added potential to acquirers. Failure hazard drops because to learning. The results are robust to various alternative interpretations and cannot be explained by unobserved heterogeneity. While hazards decline with age, they do not go to zero. This explains why, eventually, all listed firms disappear

Mergers, executive risk reduction and stockholder wealth

Among the possible consequences of agency problems between owners and managers is a tendency by managers to make investment decisions for their firms that are deliberately aimed at reducing firm risk, as a means to control managers' personal wealth risk. The literature has suggested that such behavior may occur to the detriment of shareholder wealth, and that mrgers may be a particular class of investment decisions for which the behavior would be observable. We test these hypotheses empirically, but find no evidence from our merger sample that risk reduction for the aqquiring firm is the typical outcome nor that, when it occurs, it is differentially costly for shareholders.

Turning Agents into Psychological Principals: Aligning Interests of Non-Owners Through Psychological Ownership

Principals who delegate tasks to agents face the perennial challenge of overcoming agency problems. We investigate whether feelings of ownership among senior managers in the absence of formal ownership can align agents' interests with those of principals, thus turning agents into psychological principals. Using a moderated mediation model, we find that psychological ownership is positively related to company performance through the mediating effect of individual-level entrepreneurial behaviour. We also find that the effect of psychological ownership on individual-level entrepreneurial behaviour and, ultimately, company performance is weaker for high levels of monitoring compared to low levels. These findings offer important contributions to agency, psychological ownership, and entrepreneurship literatures.

Capitals and capabilities: linking structure and agency to reduce health inequalities

While empirical evidence continues to show that low socio-economic position is associated with less likely chances of being in good health, our understanding of why this is so remains less than clear. In this paper we examine the theoretical foundations for a structure-agency approach to the reduction of social inequalities in health. We use Max Weber's work on lifestyles to provide the explanation for the dualism between life chances (structure) and choice-based life conduct (agency). For explaining how the unequal distribution of material and non-material resources leads to the reproduction of unequal life chances and limitations of choice in contemporary societies, we apply Pierre Bourdieu's theory on capital interaction and habitus. We find, however, that Bourdieu's habitus concept is insufficient with regard to the role of agency for structural change and therefore does not readily provide for a theoretically supported move from sociological explanation to public health action. We therefore suggest Amartya Sen's capability approach as a useful link between capital interaction theory and action to reduce social inequalities in health. This link allows for the consideration of structural conditions as well as an active role for individuals as agents in reducing these inequalities. We suggest that people's capabilities to be active for their health be considered as a key concept in public health practice to reduce health inequalities. Examples provided from an ongoing health promotion project in Germany link our theoretical perspective to a practical experience.

Executive compensation and executive incentive problems: an empirical analysis

The question of whether the design of the corporate executive pay package reflects an attempt to reduce agency costs between shareholders an managers is adressed. The components of senior executive pay are found to vary systematically across firms in a manner that cannot easily be explained by tax effects, and which would indicate that individual elements of pay are aimed at controlling for limited horizon and risk exposure problems. Managerial decisions and the structure of managerial pay therefore appear to be interrelated.

Verbs as Linguistic Markers of Agency - The Social Side of Grammar

Basic grammatical categories may carry social meaning irrespective of their semantic content. In a set of four studies, we demonstrate that verbs – a basic linguistic category present and distinguishable in most languages – are related to the perception of agency, a fundamental dimension in social perception. In an archival analysis on actual language use in Polish and German, we found that targets stereotypically associated with high agency (men and young people) are presented in the immediate neighborhood of a verb more often than non-agentic social targets (women and old people). Moreover, in three experiments using a pseudo-word paradigm, verbs (but not adjectives and nouns) were consistently associated with agency (but not communion). These results provide consistent evidence that verbs, as grammatical vehicles of action, are linguistic markers of agency. In demonstrating meta-semantic effects of language, these studies corroborate the view of language as a social tool and of language as an integral part of social perception.