Abstract

http://ssrn.com/abstract=187348
 
 

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Do IPO Charters Maximize Firm Value? Antitakeover Protection in Ipos


Robert Daines


Stanford Law School; Stanford Graduate School of Business

Michael Klausner


Stanford Law School

January 16, 2000

New York University Center for Law and Business Working Paper No. 99-015; and Stanford Law School John M. Olin Law and Economics Working Paper No. 184

Abstract:     
This paper focuses on the widely held views that: (a) antitakeover provisions (ATPs) increase agency costs, thereby reducing firm value; and (b) firms going public minimize agency costs, thereby maximizing firm value. We show that these views cannot comfortably co-exist: ATPs are common in a sample of IPO-stage charters. Moreover, ATP use is not explained by two efficiency explanations of ATP use with theoretical support - target firms' need for bargaining power when a bid is made and the threat of managerial myopia. Rather, we find that antitakeover protection is used to protect management when takeovers are most likely and management performance most transparent. ATP use, however, is uncorrelated with a proxy for high private benefits.

Number of Pages in PDF File: 49

JEL Classification: G30, G32

Accepted Paper Series


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Date posted: February 24, 2000  

Suggested Citation

Daines, Robert and Klausner, Michael, Do IPO Charters Maximize Firm Value? Antitakeover Protection in Ipos (January 16, 2000). Journal of Law, Economics and Organization, Vol. 17, pp. 83-120, 2001. Available at SSRN: http://ssrn.com/abstract=187348 or http://dx.doi.org/10.2139/ssrn.187348

Contact Information

Robert Daines
Stanford Law School ( email )
559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-736-2684 (Phone)
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States

Michael D. Klausner (Contact Author)
Stanford Law School ( email )
559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-723-6433 (Phone)
650-725-0253 (Fax)
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