The Nature of Takeover Resistance: Aggressive Post-Offer Actions to Frustrate Takeover Bids vs. Passive Resistance
Nicholas F. Carline
University of Birmingham - Birmingham Business School
Scott C. Linn
University of Oklahoma - Michael F. Price College of Business
Pradeep K. Yadav
University of Oklahoma Price College of Business
February 29, 2016
American Finance Association Meetings Working Paper
We examine the nature of takeover resistance by investigating the determinants of the choice by target managers to take post-offer actions designed to aggressively frustrate the takeover bid, in preference to choosing passive resistance through tactics that just secure a better offer for shareholders. We find that target firm governance and bidder offer characteristics significantly influence the choice in a manner consistent with takeover ‘frustrating actions’ being motivated by managerial entrenchment. We also find that, relative to passive resistance, frustrating actions negatively impact stockholder payoffs and increase the likelihood of CEO turnover, irrespective of whether the resisted bid succeeds.
Number of Pages in PDF File: 55
Keywords: Takeover bid; Resistance; Corporate Governance; C.E.O. turnover
JEL Classification: G34
Date posted: March 16, 2011 ; Last revised: March 2, 2016
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