Abstract
By comparing the operating performance (ROE) between a group of firms with proxy contests for control and a matching group of no‐contest firms, this study concludes that contest firms generally underperformed matching firms in both pre‐ and post‐contest periods. Lower profit margins of contest firms appear to be the major cause of underperformance. Results are different when proxy contest companies are segregated into successful and unsuccessful contest groups. Firms in which dissidents succeeded in gaining control were characterized by underperformance in the pre‐contest period and improved performance in the post‐contest period. The improvement seems to be due to more efficient management of the profit margin. The performance of firms in which dissidents failed, however, was close to that of the matching group in the pre‐contest period but deteriorated in the post‐contest period.
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