Location, Managerial Entrenchment, and Short-Term Pressure

Abstract

Prior studies have documented that geographic distance renders remotely located firms more difficult to monitor. This paper asks whether remote firms self-discipline by removing anti-takeover provisions. We find that remote firms are more likely to leave anti-takeover provisions in place, which further enhances managerial entrenchment. Interestingly, this entrenchment does not lead to worse investment decisions by remote firms. In fact, we provide evidence that being out of sight could benefit firms by mitigating short-term pressure from Wall Street.