Managerial discipline and corporate restructuring following performance declines

We examine the incidence of disciplinary events that reduce the control of current managers, and corporate restructuring among firms experiencing a la rge decline in operating performance during an active takeover period (1985 -1988) and a less active period (1989-1992). We document a significant decl ine in the disciplinary events from the active to the less active period th at is driven by a significant decline in disciplinary takeovers, those take overs that result in a top executive change. Following the performance decl ine, however, there is a substantial amount of corporate restructuring, and a significant improvement in operating performance, during both the active and the less active takeover period. We conclude that, although some manag erial disciplinary events are related to overall takeover activity, the dec line in takeover activity does not result in fewer performance-enhancing re structurings following performance declines. (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification. G32; G34.