TY - JOUR
T1 - Corporate integrity and hostile takeover threats
T2 - Evidence from machine learning and “CEO luck”
AU - Ongsakul, Viput
AU - Chatjuthamard, Pattanaporn
AU - Jiraporn, Pornsit
AU - Chaivisuttangkun, Sirithida
N1 - Funding Information:
The research was funded by Chulalongkorn University under the Ratchadapisek Sompoch Endowment Fund through Center of Excellence (CE) in Management Research for Corporate Governance and Behavioral Finance and Sasin School of Management through SASIN Major Grant for a research program.
Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/12
Y1 - 2021/12
N2 - Exploiting an innovative measure of corporate integrity based on machine learning and textual analysis, this paper explores the effect of hostile takeover exposure on corporate integrity. Using a measure of takeover vulnerability principally based on state legislation, we find that a more active takeover market raises corporate integrity, corroborating the notion that the disciplinary mechanism associated with the takeover market induces managers to enhance corporate integrity. Specifically, a rise in takeover exposure by one standard deviation results in an improvement in integrity by 4.00%. Further analysis confirms the conclusion including propensity score matching, entropy balancing, and instrumental-variable analysis. Our study is among the first to employ this novel text-based measure of corporate integrity. Finally, additional analysis based on ”CEO luck” validates the conclusion.
AB - Exploiting an innovative measure of corporate integrity based on machine learning and textual analysis, this paper explores the effect of hostile takeover exposure on corporate integrity. Using a measure of takeover vulnerability principally based on state legislation, we find that a more active takeover market raises corporate integrity, corroborating the notion that the disciplinary mechanism associated with the takeover market induces managers to enhance corporate integrity. Specifically, a rise in takeover exposure by one standard deviation results in an improvement in integrity by 4.00%. Further analysis confirms the conclusion including propensity score matching, entropy balancing, and instrumental-variable analysis. Our study is among the first to employ this novel text-based measure of corporate integrity. Finally, additional analysis based on ”CEO luck” validates the conclusion.
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U2 - 10.1016/j.jbef.2021.100579
DO - 10.1016/j.jbef.2021.100579
M3 - Article
AN - SCOPUS:85116824959
SN - 2214-6350
VL - 32
JO - Journal of Behavioral and Experimental Finance
JF - Journal of Behavioral and Experimental Finance
M1 - 100579
ER -