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Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood

Tunyi Tunyi Abongeh, Collins G. Ntim, Jo Danbolt Orcid Logo

International Review of Financial Analysis, Volume: 62, Pages: 1 - 20

Swansea University Author: Tunyi Tunyi Abongeh

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DOI (Published version): 10.1016/j.irfa.2019.01.004

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....

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Published in: International Review of Financial Analysis
ISSN: 1057-5219 1873-8079
Published: Elsevier BV 2019
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URI: https://cronfa.swan.ac.uk/Record/cronfa65108
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first_indexed 2023-11-26T11:04:28Z
last_indexed 2023-11-26T11:04:28Z
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spelling v2 65108 2023-11-26 Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood eefe2792c8eed5b49feede33981dfa53 Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2023-11-26 BAF 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. Journal Article International Review of Financial Analysis 62 1 20 Elsevier BV 1057-5219 1873-8079 Hyperopia, Inefficient management hypothesis, Management performance, Myopia, Takeovers 31 3 2019 2019-03-31 10.1016/j.irfa.2019.01.004 http://dx.doi.org/10.1016/j.irfa.2019.01.004 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University Not Required 2024-01-03T10:15:24.9385572 2023-11-26T11:03:36.4501871 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Tunyi Tunyi Abongeh 1 Collins G. Ntim 2 Jo Danbolt 0000-0002-6572-5753 3 65108__29346__dcb770b7efef4e128c5536ab266f577e.pdf 65108.VOR.pdf 2024-01-03T10:13:49.8997855 Output 1054406 application/pdf Version of Record true © 2019 The Authors. Published by Elsevier Inc. Distributed under the terms of a Creative Commons Attribution 4.0 International License (CC BY 4.0). true eng https://creativecommons.org/licenses/by/4.0/
title Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
spellingShingle Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
Tunyi Tunyi Abongeh
title_short Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
title_full Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
title_fullStr Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
title_full_unstemmed Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
title_sort Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Tunyi Tunyi Abongeh
Collins G. Ntim
Jo Danbolt
format Journal article
container_title International Review of Financial Analysis
container_volume 62
container_start_page 1
publishDate 2019
institution Swansea University
issn 1057-5219
1873-8079
doi_str_mv 10.1016/j.irfa.2019.01.004
publisher Elsevier BV
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url http://dx.doi.org/10.1016/j.irfa.2019.01.004
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description 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.
published_date 2019-03-31T10:15:26Z
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score 11.013731

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