Agency Costs of Overvalued Equity

By William H. Sackley. 2005

763 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/81a07cb64a75f50f3685d1bd578eb1efb220cbcb

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In Strategy and Management

Citations in the corpus

Overpriced Shares, Ill-Advised Acquisitions, and Goodwill Impairment (2011, neutral): “7 Earnings management, particularly by “real means”—such as cutting R&D, postponing advertising, or delaying IT systems updates, on which there is extensive evidence—is similarly aimed at such short-term justification of overpriced shares (Jensen 2005).”
How have M&As changed? Evidence from the sixth merger wave (2012, positive): “Firm overvaluation is measured using Tobin's Q (Jensen 2005 ; Moeller, Schlingemann, and Stulz 2005 ), which is the market value of assets over the book value of assets.”
The Sources of Value Destruction in Acquisitions by Entrenched Managers (2012, neutral): “4 For a detailed description of the computation of PRIV, see Lee et al. (2001) and Dong et al.”
Bank CEO Incentives and the Credit Crisis (2009, neutral): “John and Qian (2003) found median CEO equity holdings of 0.”
Overvalued Equity and Financing Decisions (2012, positive): “Jensen (2004, 2005) provides a catering argument, that the pressure on managers to take actions such as raising capital to finance ambitious projects is especially strong among overvalued firms.”
Earnings Restatements, Changes in CEO Compensation, and Firm Performance (2008, background): “For example, Jensen (2005) suggests that overvalued equity can lead to agency problems, whereby managers use aggressive accounting to maintain the overvaluation when they cannot continue producing stellar results, thus reducing the core value of the firm.”
The Stock Market and Corporate Investment: A Test of Catering Theory (2009, background): “Baker, Stein, and Wurgler (2003) test this hypothesis directly and find evidence that stock market mispricing does influence firms’ investment through an equity issuance channel (see also Jensen, 2005 ).”
The Impact of Firm Location on Equity Issuance (2008, background): “For papers that address potential market timing by new issue firms see Burch, Christie, and Nanda (2004), Jegadeesh (2000), Jensen (2005), and Loughran and Ritter (1995).”
Trading incentives to meet the analyst forecast (2006, background): “meeting the analyst forecast creates a favorable environment for managers who plan to sell their shares, thus prompting these managers to exert additional effort to just meet the analyst forecast when they otherwise would have missed the benchmark (Jensen, 2004).”
Costly arbitrage and the myth of idiosyncratic risk (2006, background): “Jensen (2005) argues that overvalued share prices create incentives for management to destroy long-run value, and that corporate governance policy has been ineffective.”
Does Voluntary Adoption of a Clawback Provision Improve Financial Reporting Quality (2013, neutral): “Ed deHaan August 2023 Page 1 Ed deHaan edehaan@stanford.edu • gsb-faculty.stanford.edu/ed-dehaan/”