Which Antitakeover Provisions Deter Takeovers?

66 Pages Posted: 17 Mar 2018 Last revised: 26 Apr 2023

See all articles by Jonathan M. Karpoff

Jonathan M. Karpoff

University of Washington - Michael G. Foster School of Business; European Corporate Governance Institute (ECGI)

Robert J. Schonlau

Colorado State University, Fort Collins - Department of Finance & Real Estate

Eric W. Wehrly

Western Washington University

Date Written: May 1, 2022

Abstract

Antitakeover provisions play a central role in corporate governance research. But there is little agreement over which, if any, provisions actually affect takeover likelihoods. In tests that account for the endogenous use of antitakeover provisions, we find that at most 11 of the 24 G-index provisions are negatively related to takeover likelihood. Various indices used in the literature measure takeover deterrence to the extent they include this subset of provisions. In more stringent tests, only four provisions are consistently and negatively related to takeover likelihood throughout the 1995-2020 period, while one provision (golden parachutes) is positively related to takeover likelihood.

Keywords: Antitakeover provisions, takeover defenses, takeover likelihood, governance, acquisitions

JEL Classification: G34, K22, L14

Suggested Citation

Karpoff, Jonathan M. and Schonlau, Robert J. and Wehrly, Eric W., Which Antitakeover Provisions Deter Takeovers? (May 1, 2022). European Corporate Governance Institute – Finance Working Paper No. 836/2022, Journal of Corporate Finance, Vol. 75, 2022, Available at SSRN: https://ssrn.com/abstract=3142195 or http://dx.doi.org/10.2139/ssrn.3142195

Jonathan M. Karpoff (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3200
United States
206-685-4954 (Phone)
206-221-6856 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels
Belgium

Robert J. Schonlau

Colorado State University, Fort Collins - Department of Finance & Real Estate ( email )

Fort Collins, CO 80523
United States
9704916280 (Phone)
80523 (Fax)

Eric W. Wehrly

Western Washington University ( email )

516 High Street
Bellingham, WA 98225
United States
3606504820 (Phone)

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