Employee-Manager Alliances and Shareholder Returns from Acquisitions

B-Tier
Journal: Journal of Financial and Quantitative Analysis
Year: 2020
Volume: 55
Issue: 2
Pages: 473-516

Authors (3)

Masulis, Ronald W. (UNSW Sydney) Wang, Cong (not in RePEc) Xie, Fei (not in RePEc)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We examine the potential for management-worker alliances when employees have substantial voting rights, and how such alliances affect the balance of power between managers and shareholders. We find that substantial employee voting rights exacerbate the manager-shareholder conflicts. Specifically, they entrench incumbent managers and allow them to pursue value-destroying acquisitions by undercutting the disciplinary influence of the corporate control market. Importantly, employee support for managers is conditional on favorable treatment of employees. Our findings are consistent with Pagano and Volpin’s theory of worker-management alliances and highlight the potential risks associated with large employee voting power.

Technical Details

RePEc Handle
repec:cup:jfinqa:v:55:y:2020:i:2:p:473-516_4
Journal Field
Finance
Author Count
3
Added to Database
2026-01-25