The Nature of Takeover Resistance: Aggressive Post-Offer Actions to Frustrate Takeover Bids vs. Passive Resistance

55 Pages Posted: 16 Mar 2011 Last revised: 2 Mar 2016

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

Date Written: February 29, 2016

Abstract

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.

Keywords: Takeover bid; Resistance; Corporate Governance; C.E.O. turnover

JEL Classification: G34

Suggested Citation

Carline, Nicholas F. and Linn, Scott C. and Yadav, Pradeep K., The Nature of Takeover Resistance: Aggressive Post-Offer Actions to Frustrate Takeover Bids vs. Passive Resistance (February 29, 2016). American Finance Association Meetings Working Paper. Available at SSRN: https://ssrn.com/abstract=1785364 or http://dx.doi.org/10.2139/ssrn.1785364

Nicholas F. Carline

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Scott C. Linn (Contact Author)

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States
405-325-3444 (Phone)
405-325-1957 (Fax)

Pradeep K. Yadav

University of Oklahoma Price College of Business ( email )

307 W.Brooks, Room 205A Division of Finance
Norman, OK 73019
United States
4053256640 (Phone)
4053255491 (Fax)

HOME PAGE: http://www.ou.edu/price/finance/faculty/pradeep_yadav.html

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