Browsing by Author "Ndofor, Hermann Achidi"

Now showing 1 - 4 of 4
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    Disciplining Role of Short Sellers: Evidence From M&A Activity
    (Sage, 2021-05) Shi, Wei; Ndofor, Hermann Achidi; Hoskisson, Robert E.; Kelley School of Business
    Prior research has focused on the influence of long investors (e.g., institutional investors) on merger-and-acquisition (M&A) decisions. This study investigates the role of short sellers in shaping managerial acquisitiveness and M&A decision quality. Short sellers impose a downward pressure on stock prices by disseminating negative information to the market. Given that managerial wealth and job security hinge on stock prices, top managers respond to increased short selling by refraining from excessive M&A activities because M&As could provide opportunities for short sellers to spread negative information and dampen stock prices. Furthermore, the negative influence of short sellers on managerial acquisitiveness is enhanced by the market for corporate control as an external governance mechanism and by CEO equity ownership as an internal governance mechanism. When firms with increasing short selling do engage in M&As, they gain higher M&A announcement returns and operating performance. We test our hypotheses using firms in the S&P 1500 from 2002 to 2014 and find support for our arguments.
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    Is there a “Dark Side” to Monitoring? Board and Shareholder Monitoring Effects on M&A Performance Extremeness
    (Wiley, 2017-11) Goranova, Maria; Priem, Richard L.; Ndofor, Hermann Achidi; Trahms, Cheryl A.; Kelley School of Business - Indianapolis
    Research summary: We investigate the effects of monitoring by boards of directors and institutional shareholders on merger and acquisition (M&A) performance extremeness using a sample of M&A deals from 1997 to 2006. Both governance research and legal reforms generally have espoused a “raise all boats” view of monitoring. We instead investigate whether monitoring may serve as a double-edged sword that limits CEO discretion to undertake both value-destroying M&A deals and value-creating ones. Our findings indicate that the relationship between monitoring and M&A performance is more complex than previously believed. Rather than “raising all boats” in a shift towards better M&A outcomes, monitoring instead is associated with lower M&A losses, but also with lower M&A gains.
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    Providing CEOs With Opportunities to Cheat: The Effects of Complexity-Based Information Asymmetries on Financial Reporting Fraud
    (Sage, 2015-09) Ndofor, Hermann Achidi; Wesley, Curtis; Priem, Richard L.; Kelley School of Business
    Opportunities for financial reporting fraud arise because of information asymmetries—often labeled “lack of transparency”—between top managers and their diverse shareholders. We evaluate the relative contributions of information asymmetries arising from industry-level and firm-level complexities to the likelihood of top managers committing financial reporting fraud. Using a sample of 453 matched pairs of firms that have and have not been identified as having committed financial reporting fraud, we found that information asymmetries arising from industry- and firm-level complexities increase the likelihood of financial fraud. Moreover, more CEO stock options increase the likelihood of fraud when industry complexity is high, while aggressive monitoring by the audit committee reduces the likelihood of reporting fraud when firm-level complexity is high.
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    Top Management Team Tenure Diversity and Performance: The Moderating Role of Behavioral Integration
    (IEEE, 2018) Yi, Yaqun; Ndofor, Hermann Achidi; He, Xiaoming; Wei, Zelong; Kelley School of Business - Indianapolis
    Integrating insights from organizational information processing theory and social categorization theory, we examine how top management team (TMT) tenure diversity affects team performance. We propose a theoretical framework that examines how these two conflicting processes occur simultaneously within diverse TMTs by arguing that TMT tenure variety influences information processing while TMT tenure separation influences the social categorization process. We argue for the presence of nonlinear relationships between tenure variety, tenure separation, and team performance. Furthermore, we propose that these relationships are moderated by the level of TMT behavioral integration. Based on a sample of 357 senior managers from 126 firms in China, we find that both TMT tenure variety and TMT tenure separation have opposing and nonlinear relationships with TMT performance, and the relationship between TMT tenure separation and TMT performance is moderated by the level of TMT behavioral integration. Our results help clarify the conflicting conclusions of previous TMT tenure diversity research. Our findings suggest that the effect of diversity depends on the type of diversity as they affect different processes. Our findings also explain how the opposing effects of both information processing and social categorization can occur simultaneously in the TMT. Furthermore, the effects of both processes are not linear while the level of diversity variety and diversity separation can affect the marginal effects. Finally, TMT behavioral integration processes affect how tenure diversity plays its role in team performance.