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Takeover Defenses of IPO Firms

Laura Casares Field

Smeal College of Business

Jonathan M. Karpoff

University of Washington - Michael G. Foster School of Business


Journal of Finance, Vol. 57, No. 5, October 2002

Many firms deploy takeover defenses when they go public. We find that IPO managers are more likely to deploy defenses when their compensation is high, shareholdings are small, and oversight from non-managerial shareholders is weak. The presence of a takeover defense at the time of the IPO is negatively related to subsequent acquisition likelihood, yet has no impact on takeover premiums for firms that are acquired. These results do not support arguments that takeover defenses facilitate the eventual sale of the IPO firm at high takeover premiums. Rather, they suggest that managers shift the cost of takeover protection onto non-managerial shareholders. Thus, agency problems are important even for firms at the IPO stage.

Number of Pages in PDF File: 34

Keywords: Initial Public Offerings, Takeover Defenses, Acquisitions

JEL Classification: G30, G32, G34, G24

Accepted Paper Series

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Date posted: January 8, 2002 ; Last revised: August 29, 2008

Suggested Citation

Field, Laura Casares and Karpoff, Jonathan M., Takeover Defenses of IPO Firms (2002). Journal of Finance, Vol. 57, No. 5, October 2002. Available at SSRN: http://ssrn.com/abstract=286923

Contact Information

Laura Casares Field (Contact Author)
Smeal College of Business ( email )
609D BAB I
University Park, PA 16802
United States
818-865-1483 (Phone)
818-865-3362 (Fax)
Jonathan M. Karpoff
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)
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