Fortune Favors the Bold
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Univ Arizona, Eller Coll ManagementIssue Date
2017-06-15Metadata
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CAMBRIDGE UNIV PRESSCitation
Fortune Favors the Bold 2017, 52 (03):895 Journal of Financial and Quantitative AnalysisRights
Copyright © Michael G. Foster School of Business, University of Washington 2017.Collection Information
This 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 repository@u.library.arizona.edu.Abstract
We 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.Note
12 month embargo; Published online: 15 June 2017ISSN
0022-10901756-6916