Do Anti-Takeover Provisions Spur Corporate Innovation?
Thomas J. Chemmanur
Boston College - Carroll School of Management
Indiana University - Kelley School of Business
March 27, 2013
AFA 2012 Chicago Meetings Paper
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, O31working papers series
Date posted: March 17, 2010 ; Last revised: March 28, 2013
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