33
- Ownershipstructure.ForcedCEOchangesaremore
commonincompanieswithhighinstitutionalandlow
insider holdings.
34 Theyalsoseemtooccurmorefrequentlyinfirms
thataremoredependentonequitymarketsfornew
capital.
35 - Industry structure. CEOs are more likely to be
replaced in competitive industries.
36
Insummary,firmswhereyouseeforcedCEOchangeshare
some characteristics with firms that are targets of hostile
acquisitions—they are poorly managed and run—but they
tendto havemuch moreeffective boards ofdirectors and
moreactivistinvestorswhoareabletochangemanagement
without turning the firm over to a hostile acquirer.
MANIFESTATIONS OF THE VALUE OF CONTROL
Ifthevalueofcontrolisderivedfromchangingthewaya
businessisrunandtheexpectedvalueofcontrolisafunction
ofthevalueofcontrolandthelikelihoodthatyoucanchange
themanagementofacompany,ithasimplicationsforalmost
everyaspectofvaluation,fromvaluingpubliclytradedfirms
foracquisitionstovaluingastakeinaprivatebusiness.Inthis
section,weconsidertherangeofapplicationswherethevalue
of control plays a role.
Hostile Acquisitions