Abstract

http://ssrn.com/abstract=1923667
 
 

References (54)



 
 

Citations (2)



 


 



The Bonding Hypothesis of Takeover Defenses: Evidence from IPO Firms


William C. Johnson


Suffolk University - Sawyer School of Management

Jonathan M. Karpoff


University of Washington - Michael G. Foster School of Business

Sangho Yi


Sogang University

September 22, 2014


Abstract:     
We propose and test an efficiency explanation for why firms deploy takeover defenses using IPO firm data. We hypothesize that takeover defenses bond the firm’s commitments by reducing the likelihood that an outside takeover will change the firm’s operating strategy and impose costs on its business partners. Consistent with this hypothesis, we find that IPO firms deploy more takeover defenses when they have important business relationships to protect. An IPO firm’s use of takeover defenses is positively related to the longevity of its business relationships. IPO firms’ large customers experience spillover effects that are positively related to the IPO firm’s use of takeover defenses. And IPO firms’ valuation and subsequent operating performance are positively related to their use of takeover defenses when it has important business relationships.

Number of Pages in PDF File: 62

Keywords: antitakeover provisions, governance, firm value, initial public offerings

JEL Classification: G34, K22, L23

working papers series





Download This Paper

Date posted: September 7, 2011 ; Last revised: September 25, 2014

Suggested Citation

Johnson, William C. and Karpoff, Jonathan M. and Yi, Sangho, The Bonding Hypothesis of Takeover Defenses: Evidence from IPO Firms (September 22, 2014). Available at SSRN: http://ssrn.com/abstract=1923667 or http://dx.doi.org/10.2139/ssrn.1923667

Contact Information

William C. Johnson
Suffolk University - Sawyer School of Management ( email )
Boston, MA 02108
United States
Jonathan M. Karpoff (Contact Author)
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
206-685-4954 (Phone)
206-221-6856 (Fax)
Sangho Yi
Sogang University ( email )
Seoul 121-742
Korea, Republic of (South Korea)
82-2-705-8864 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 2,188
Downloads: 501
Download Rank: 31,639
References:  54
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.546 seconds