The Relative number of anti-takeover provisions and the market for corporate control

Ivan Obaydin, Ralf Zurbruegg, Paul Brockman*, Grant Richardson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Using propensity score matching, we provide new evidence of a non-monotonic relationship between the number of anti-takeover provisions (ATPs) a firm adopts, relative to peer-matched firms, and takeover likelihood. Firms with either a relatively low or high number of ATPs are significantly less likely to be a takeover target. We argue that this outcome is a result of the expected benefits versus costs of targeting firms in the left and right tail of the peer-matched ATP distribution. In particular, firms on the left tail with a relatively small number of ATPs tend to have high market valuations, indicative of management optimizing shareholder welfare and hence less concerned about the threat of a takeover. Overall, our findings have important implications for both corporate and regulatory policy.
Original languageEnglish
Number of pages41
JournalJournal of Financial Research
DOIs
Publication statusAccepted/In press - 21 Mar 2021
Externally publishedYes

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