Takeover Defenses: Entrenchment and Efficiency

48 Pages Posted: 2 Aug 2014

See all articles by Sanjeev Bhojraj

Sanjeev Bhojraj

Cornell University - Samuel Curtis Johnson Graduate School of Management

Partha Sengupta

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Suning Zhang

Iowa State University - Debbie and Jerry Ivy College of Business

Date Written: July 31, 2014

Abstract

This paper explores the potential role of anti-takeover provisions (ATPs) in long-term value creation. Using multiple research designs, we find that long-term focused (innovative) firms benefit from takeover protection. We also find that the protected innovative firms are less likely to engage in myopic activities, which is consistent with protection reducing short-term pressures on innovative firms. In contrast to prior research that predominantly documents evidence of harmful effects of ATPs on average, we show that ATPs can provide benefits to a subset of firms.

Keywords: Corporate governance, Takeover defenses, Antitakeover provision, State antitakeover legislation, Firm value, Managerial Myopia

JEL Classification: G32, G34, G38

Suggested Citation

Bhojraj, Sanjeev and Sengupta, Partha and Zhang, Suning, Takeover Defenses: Entrenchment and Efficiency (July 31, 2014). Available at SSRN: https://ssrn.com/abstract=2474612 or http://dx.doi.org/10.2139/ssrn.2474612

Sanjeev Bhojraj (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Department of Accounting
Ithaca, NY 14853
United States
607-255-4069 (Phone)
607-254-4590 (Fax)

Partha Sengupta

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street, SW
Mail Stop 6E-3
Washington, DC 20219-0001
United States
202-679-5525 (Phone)

Suning Zhang

Iowa State University - Debbie and Jerry Ivy College of Business ( email )

613 Wallace Road
Ames, IA 50011-2063
United States

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