Difference between revisions of "Corporate Elite Networks and Governance Changes in the 1980s"
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== Discussion == | == Discussion == | ||
| − | The | + | The "golden parachute" practice is more popular in the management layers because it directly protects their interest by giving them direct compensation in the form of cash. |
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== Related Papers == | == Related Papers == | ||
Revision as of 22:01, 1 October 2012
Citation
Gerald F. David, Henrich R. Greve. Corporate Elite Networks and Governance Changes in the 1980s, The American Journal of Sociology, Vol. 103, No. 1. (Jul., 1997), pp. 1-37.
Online version
Summary
This paper analyzed the diffusion of two practices adopted by corporations in the United States during the 1980s, in order to deal with hostile takeovers. During a takeover, the initiators of the takeover will buy stocks of the targeting corporation from its shareholders at a high premium, in return for control of the corporation. During this process, the upper management suffers because they would lose their job, should the takeover succeeded.
The "golden parachute" practice awards the management generous severance packages (typically three years' salary) to compensate for their lost of employment; whereas the "poison pill" practice enables the shareholders to buy the stocks at a 50% discount, which in effect raised the cost of hostile takeovers (if the shareholders decide not approve the takeover).
At the end of the 1980s, most corporations have adopted either one of the practices, and the split is around 50/50. However, it took the "golden parachute" 7 years to achieve its saturation (around 50%), whereas "poison pill" took only 3 years.
The author argues that one of the explanation of this difference in adoption speed lies in the fact that the two practices are seen more legitimate from different group of corporate elites, that have distinct ways of spreading and taking information.
Discussion
The "golden parachute" practice is more popular in the management layers because it directly protects their interest by giving them direct compensation in the form of cash.
Related Papers
- Watts, D. J. and Dodds, P. S. 2007. Influentials, Networks, and Public Opinion Formation. Journal of Consumer Research 34: 441-58.
- Leskovec, J. et al. 2007. Cascading Behavior in Large Blog Graphs. In SIAM International Conference on Data Mining.
Study Plan
You may first want to take a look at Binomial regression and Poisson regression.
Also, read the papers in the "Related Papers" section.
