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Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls

Pattanaporn Chatjuthamard (Center of Excellence in Management Research, Corporate Governance and Behavioral Finance, SASIN School of Management, Chulalongkorn University, Bangkok, Thailand)
Pandej Chintrakarn (Business Administration Division, Mahidol University International College (MUIC), Nakhon Pathom, Thailand)
Suwongrat Papangkorn (Thammasat Business School, Thammasat University, Bangkok, Thailand)
Pornsit Jiraporn (Great Valley School of Graduate Professional Studies, Pennsylvania State University, Malvern, Pennsylvania, USA)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Article publication date: 1 December 2023

Issue publication date: 19 January 2024

394

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.

Keywords

Acknowledgements

The research was funded by the National Research Council of Thailand (NRCT): N42A650683.

Since submission of this article, the following author has updated their affiliation: Suwongrat Papangkorn is at Center of Excellence in Management Research, Corporate Governance and Behavioral Finance, SASIN School of Management, Chulalongkorn University, Bangkok, Thailand.

Citation

Chatjuthamard, P., Chintrakarn, P., Papangkorn, S. and Jiraporn, P. (2024), "Corporate culture and takeover vulnerability: evidence from machine learning and earnings conference calls", International Journal of Accounting & Information Management, Vol. 32 No. 1, pp. 74-99. https://doi.org/10.1108/IJAIM-02-2023-0052

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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