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Fortune Favors the Bold

  • Costanza Meneghetti and Ryan Williams


We investigate whether incentives to join the Fortune 500 affect corporate decisions. Firms closer to the cutoff appear to take actions to join the list by engaging in more mergers and acquisitions activity, bidding for larger targets, and paying higher takeover premia. Further, the relation is stronger for firms with more-entrenched chief executive officers, and the stock market reaction to bids is worse when bidders are close to the Fortune 500’s cutoff. A 1994 methodological change by Fortune acts as an exogenous shock for identification. Our results suggest that firms try to increase revenues to join the Fortune 500 but that such actions adversely affect shareholders.


Corresponding author

* Meneghetti,, College of Business and Economics, West Virginia University; Williams (corresponding author),, Eller College of Management, University of Arizona.


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We thank Vikas Agarwal, Leonce Bargeron (the referee), Jeffrey Coles, Dirk Jenter, Jayant Kale, Omesh Kini, Paul Malatesta (the editor), Sébastien Michenaud, Matthew Rhodes-Kropf, Chip (Harley) Ryan, and Rick Sias; seminar participants at Arizona State University, Georgia State University, and Université Paris-Dauphine; and participants at the 2013 American Finance Association annual meetings and the 2013 Paris December conference for helpful comments and suggestions. We also thank David Yin for excellent research assistance. Williams acknowledges financial support from the Center for the Economic Analysis of Risk (CEAR) at Georgia State University and the Stephen Smith Fellowship. All errors are ours.



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Fortune Favors the Bold

  • Costanza Meneghetti and Ryan Williams


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