Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls
Issued Date
2023-01-01
Resource Type
ISSN
18347649
eISSN
17589037
Scopus ID
2-s2.0-85178182278
Journal Title
International Journal of Accounting and Information Management
Rights Holder(s)
SCOPUS
Bibliographic Citation
International Journal of Accounting and Information Management (2023)
Suggested Citation
Chatjuthamard P., Chintrakarn P., Papangkorn S., Jiraporn P. Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls. International Journal of Accounting and Information Management (2023). doi:10.1108/IJAIM-02-2023-0052 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/91390
Title
Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls
Author's Affiliation
Other Contributor(s)
Abstract
Purpose: Exploiting an innovative measure of corporate culture based on machine learning and earnings conference calls, this study aims to investigate how corporate culture is influenced by hostile takeover threats. To sidestep endogeneity, this study uses a unique measure of takeover vulnerability principally based on the staggered implementation of state legislations, which are plausibly exogenous. Design/methodology/approach: In addition to the standard regression analysis, this study also executes a variety of other empirical tests such as propensity score matching, entropy balancing and an instrumental variable analysis, to demonstrate that the results are robust. The final sample includes 27,663 firm-year observations from 4,092 distinct companies from 2001 to 2014. Findings: This study documents that more takeover exposure weakens corporate culture considerably, consistent with the managerial myopia hypothesis. Threatened by the takeover risk, managers tend to behave myopically and are less likely to make long-term investments that promote strong corporate culture in the long run. Additional analysis focusing on a culture of innovation, which is especially vulnerable to managerial myopia, produces similar evidence. Originality/value: To the best of the authors’ knowledge, this study is the first to explore the effect of takeover susceptibility on corporate culture using a distinctive metric of corporate culture based on textual analysis.