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[[Category:{{Project|Has project output=Content|Has sponsor=McNair Projects]]Center|Has title=Governance Measures|Has owner=|Has start date=|Has deadline=|Has keywords=|Has notes=|Has project status=Complete|Is dependent on=}} The ATI index can be constructed using the variables in the Takeover Defenses database marked with ATI towards the end of the line. The E index can be constructed using the variables in the RiskMetrics (ISS) Database marked with E index towards the end of the line. See the variable lists in the Availability section below.
Governance Measures (view source)
Revision as of 13:39, 21 September 2020
, 13:39, 21 September 2020no edit summary
=Measures=
Key: Measure - Build - Sources - Paper
Notes: Each paper seems to use one of three indices, the GIM, E (from BCF), or ATI index (from CN 2005), as a measure of corporate governance. The GIM & E indices are much more commonly cited than the ATI index. Most papers also exclude companies with dual-class shares because GIM did that originally. The IRRC data for individual firms' corporate governance provisions is found in its ''Corporate Takeover Defenses'' Rosenbaum 1990, 1993, 1995, 1998, 2000, 2002. 2002 is the most recent year the IRRC
*Corporate Governance (anti-takeover provision or ATP) Indices - Gompers et al 2003 (GIM) uses 24 IRRC antitakeover provisions & adds one point to index for each provision that enhances managerial power and is available 1990-2002 with sample size 11,736. Bebchuk et al 2009 (BCF) takes only 6 of those provisions for its entrenchment index (staggered boards, limits to shareholder bylaw amendments, limits to shareholder charter amendments, supermajority requirements for mergers, poison pills, and golden parachutes) and is available 1990-2002 with sample size 11,736. Cremers & Nair 2005 develops the alternative takeover protection index (ATI) which focuses on only three key antitakeover provisions (the presence of staggered boards, poison pills, and restrictions on shareholder voting to call special meetings or act through written consent - SDC M&A Database, acquirer has financial info thru Compustat and CRSP Daily Stock Price & Returns File, acquirer is included in Investor Responsibility Research Center (IRRC) of antitakeover provisions - Masulis et al 2011
=General=
The vast majority of papers use the GIM index or some variation that is created as a subset of the items in the original GIM index. Each index is constructed using the Investor Responsibility Research Center data from ''Corporate Takeover Defenses'' Rosenbaum 1990, 1993, 1995, 1998, 2000, 2002. I can only locate physical copies of these books, so I assume research assistants put together databases by hand using those physical copies. In order to obtain this data, I would contact the authors of one of the more recent papers (Masulis et al 2011, for example) or the IRRC at http://irrcinstitute. This org/contact/. It seems as though other authors contacted Gompers et al (2003) for the IRRC data , so that could also be a lead. The TCL benchmark score and the BC Govscore only seem to be used in one of the major papers about corporate governance. If you want to use the TCL benchmark score, you need a subscription to the database through a company called MSCI, which you can contact at https://www.msci.com/contact-us. The BC Govscore comes from the Institutional Shareholder Services (ISS), and you can find the specific database at https://www.issgovernance.com/solutions/iss-analytics/quickscore/. Papers on the subject, even recent ones, indicate that the corporate governance data doesn't go past 2003. It is possible that some of these databases could have more recent data, although I couldn't say if that is the case because I don't have access to the databases. =Availability===MSCI GMI Ratings in wrds== ===Takeover Defenses===Covered 2005-2014, Around 3,000 US companies per year Variables: *BDCLASSIFIED CHAR Board Classified ATI, E index*COMPANYNAME CHAR Company Name *TDADVANCENOTICEREQUIRED CHAR Advance Notice Required *TDBUSINESSCOMBINATIONPROVISION CHAR Business Combination Provision *TDBYLAWAMENDMENTNOTES CHAR By Law Amendment Notes *TDBYLAWVOTEPERCENT NUM By Law Vote Percent E index*TDCALLSPECIALMEETINGPERCENT NUM Call Special Meeting Percent ATI*TDCHARTERAMENDMENTNOTES CHAR Charter Amendment Notes *TDCHARTERVOTEPERCENT NUM Charter Vote Percent E index*TDCOMPANYSPECIALMEETINGCOMPAREST CHAR Company Special Meeting Compare State Law maybe ATI*TDCOMPANYWRITTENCONSENTCOMPAREST CHAR Company Written Consent Compare State Law Maybe ATI *TDCONSTITUENCYPROVISION CHAR Constituency Provision *TDCUMULATIVEVOTING CHAR Cumulative Voting *TDDIRECTORREMOVALFORCAUSEONLY CHAR Director Removal For Cause Only *TDDIRECTORREMOVALFORCAUSEVOTEPER NUM Director Removal For Cause Vote Percent *TDDIRECTORREMOVALWITHOUTCAUSEVOT NUM Director Removal Without Cause Vote Percent *TDDUALCLASSSTOCK CHAR Dual Class Stock *TDDUALCLASSSTOCKNOTES CHAR Dual Class Stock Notes *TDEFFECTIVECLASSIFIEDBOARD CHAR Effective Classified Board *TDFAIRPRICEPROVISION CHAR Fair Price Provision *TDMERGERVOTENOTE CHAR Merger Vote Note *TDMERGERVOTEPERCENT NUM Merger Vote Percent *TDPOISONPILL CHAR Poison Pill ATI*TDPOISONPILLNOTES CHAR Poison Pill Notes *TDSHFILLVACANCIES CHAR Share Holder Fill Vacancies *TDSHFILLVACANCIESNOTES CHAR Share Holder Fill Vacancies Notes *TDWRITTENCONSENTPERCENT NUM Written Consent Percent ATI*TICKER CHAR Ticker ===Companies===2001-2014 Variables: *OwnersFivePercentPctg OwnersFivePercentPctg ==Execucomp==01/01/1992 - 12/31/2015 Variables: *CO_PER_ROL ID number for each executive/company combination *CONAME Company Name *CUSIP CUSIP and Issue Number *EXECID Executive ID number *EXPRIC EXPRIC -- Exercise Price *GVKEY Company ID Number *INDDESC Industry Group Description *MKTPRIC MKTPRIC -- Market Price of Stock on Date of Grant *NAICS NAICS Code *NUMSECUR NUMSECUR -- Number of Options Granted *PCTTOTOPT PCTTOTOPT -- Pct of Total Options Grantd to Employees *SIC SIC Code *SPINDEX Industry Group *TICKER Ticker Symbol *VALUE VALUE -- Value (Company) *YEAR YEAR -- Fiscal Year ==RiskMetrics (ISS)== 01/01/2007 - 12/22/2015 Variables:*BLANKCHECK Blank Check Preferred *CARVE_OUT Provision in a company's majority vote standard for director elections that the standard will revert to a plurality vote in a proxy contest (where there are more nominees than open seats - a "contest carve-out") *CBOARD Classified Board E Index*TER_AMEND_VOTEPCNT Vote % Required to Amend ter *COMPANY_ID ISS (Instituitional Shareholders Services) based Company ID *CONAME Company Name *CONFVOTE Confidential Voting *CUMVOTE Cumulative Voting *CUSIP CUSIP *DUALCLASS Dual Class Stock *FAIRPRICE Fair Price *FYEND FYEND *GPARACHUTE Golden Parachutes E index*LABYLW Limit Ability to Amend ByLaws E index*LACHTR Limit Ability to Amend ter E index*LAW_AMEND_VOTEPCNT Vote % Required to Amend ByLaws *LEGACYPPS_ID LegacyID - No longer used *LSPMT Limit Ability to Call Special Meeting ATI*LWCNST Limit Ability to Act by Written Consent ATI*MAJ_VOTE_REQUIRED Indicates that the company has established a requirement that directors are elected by majority vote, rather than a plurality vote *MAJ_VOTE_REQUIREMENT Majority Vote Requirement *MAJOR_VOTE_COMM An analyst inserted note, as relevant, about the company's majority vote (to elect directors) standard *MEETINGDATE Meeting Date *MTGMONTH Meeting Month *OO_BUSCOMP Opt out of BusComb/Freezeout law *OO_CASHOUT_PA Opt out of control share cashout law (PA) *OO_CSA Opt out of control share acquisition law(CSA) *OO_DUTIES Opt out of directors duties law *OO_FAIRPRICE Opt out of Fair Price law *OO_PP Opt out of Poison Pill *OO_RPROFITS Opt out of Recapture of Profits law *OO_STAKEHOLDER Opt out of Stakeholder law *PPILL Poison Pill E index*PRICE FYEND - Stock Price *RESIGN_REQUIRE Indicates that a director is required to submit his/her resignation upon failing to receive support from a majority of votes cast (which, typically, the board may be difficult chose to accept or reject). In some cases, this provision alternatively indicates that the board may require the resignation of a director who fails to receive majority support *RT_ID IRRC OLD - Company ID *SIC SIC *SPINDEX S&Pindex *SPL_MEET_VOTEPCNT Vote % Required to Call Special Meeting *STATE state *SUPERMAJOR_PCNT Supermajority - mergers in percent E index*TICKER Company Ticker Symbol *TIER IRRC TIER - No longer used *UNEQVOTE Unequal Voting Rights *WRITTEN_CONSENT_VOTEPCNT Vote % Required for Written Consent *YEAR Year
=Papers=
abstract={We investigate how the market for corporate control (external governance) and shareholder activism (internal governance) interact. A portfolio that buys firms with the highest level of takeover vulnerability and shorts firms with the lowest level of takeover vulnerability generates an annualized abnormal return of 10% to 15% only when public pension fund (blockholder) ownership is high as well. A similar portfolio created to capture the importance of internal governance generates annualized abnormal returns of 8%, though only in the presence of “high” vulnerability to takeovers. The complementarity effect exists for firms with lower industry-adjusted leverage and is stronger for smaller firms.}
}
==Related Pages==
*[[Winner's Curse in Acquisitions (Academic Paper)]]
