AffiliationUniv Arizona, Eller Coll Management
MetadataShow full item record
PublisherCAMBRIDGE UNIV PRESS
CitationFortune Favors the Bold 2017, 52 (03):895 Journal of Financial and Quantitative Analysis
RightsCOPYRIGHT: © Michael G. Foster School of Business, University of Washington 2017
Collection InformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at email@example.com.
AbstractWe investigate whether incentives to join the Fortune 500 affect corporate decisions. Firms closer to the cutoff appear to take actions to join the list by engaging in more mergers and acquisitions activity, bidding for larger targets, and paying higher takeover premia. Further, the relation is stronger for firms with more-entrenched chief executive officers, and the stock market reaction to bids is worse when bidders are close to the Fortune 500's cutoff. A 1994 methodological change by Fortune acts as an exogenous shock for identification. Our results suggest that firms try to increase revenues to join the Fortune 500 but that such actions adversely affect shareholders.
Note12 month embargo; Published online: 15 June 2017
VersionFinal published version
SponsorsCenter for the Economic Analysis of Risk (CEAR) at Georgia State University; Stephen Smith Fellowship