Abstract

http://ssrn.com/abstract=1572219
 
 

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Do Anti-Takeover Provisions Spur Corporate Innovation?


Thomas J. Chemmanur


Boston College - Carroll School of Management

Xuan Tian


Indiana University - Kelley School of Business

March 27, 2013

AFA 2012 Chicago Meetings Paper

Abstract:     
We study the relation between antitakeover provisions (ATPs) and corporate innovation, and show that ATPs affect firm value through a novel “innovation channel.” We find that firms with a larger number of ATPs are more innovative. To establish causality, we use a regression discontinuity approach relying on “locally” exogenous variation in the number of ATPs generated by governance proposal votes that pass or fail by a small voter margin, as well as an instrumental variable approach. The evidence suggests that ATPs spur innovation and thus allow long-run value creation by insulating managers from short-term pressures arising from the equity market.

Number of Pages in PDF File: 47

Keywords: anti-takeover provisions, innovation, firm value

JEL Classification: G34, G38, O31

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Date posted: March 17, 2010 ; Last revised: December 20, 2013

Suggested Citation

Chemmanur, Thomas J. and Tian, Xuan, Do Anti-Takeover Provisions Spur Corporate Innovation? (March 27, 2013). AFA 2012 Chicago Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1572219 or http://dx.doi.org/10.2139/ssrn.1572219

Contact Information

Thomas J. Chemmanur
Boston College - Carroll School of Management ( email )
440 Fulton Hall
Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)
Xuan Tian (Contact Author)
Indiana University - Kelley School of Business ( email )
1309 E. Tenth Street
Bloomington, IN 47405
United States
812-8553420 (Phone)
824-8555875 (Fax)
HOME PAGE: http://kelley.iu.edu/tianx
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