Post-Bid Takeover Resistance: Anti-Takeover Provisions, Initial Offer Quality, and Managerial Motivations

48 Pages Posted: 23 Aug 2019 Last revised: 2 Feb 2021

See all articles by Nicholas F. Carline

Nicholas F. Carline

Department of Finance, Birmingham Business School, University of Birmingham

Sridhar Gogineni

The University of Tampa - John H. Sykes College of Business

Pradeep K. Yadav

University of Oklahoma Price College of Business

Date Written: January 4, 2020

Abstract

If a U.S. firm is a takeover target, it is the Board of the target firm that decides whether or not to offer post-bid resistance. In this context, we empirically investigate the causal impact of the anti-takeover provisions already in place in a firm, and of initial offer quality, on the target Board’s decision to offer post-bid takeover resistance. What we find is a significant positive causal relationship from anti-takeover provisions in place to post-bid resistance; and no significant causal relationship between initial offer quality and post-bid resistance. We conclude that post-bid takeover resistance by target firm Boards is, on average, motivated by managerial entrenchment considerations, and not by good faith bargaining for price improvement.

Keywords: antitakeover provisions, takeover bid, management resistance, managerial entrenchment, price improvement

JEL Classification: G34, G38

Suggested Citation

Carline, Nicholas F. and Gogineni, Sridhar and Yadav, Pradeep K., Post-Bid Takeover Resistance: Anti-Takeover Provisions, Initial Offer Quality, and Managerial Motivations (January 4, 2020). Available at SSRN: https://ssrn.com/abstract=3440672 or http://dx.doi.org/10.2139/ssrn.3440672

Nicholas F. Carline

Department of Finance, Birmingham Business School, University of Birmingham ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Sridhar Gogineni

The University of Tampa - John H. Sykes College of Business ( email )

401 W. Kennedy Blvd.
Tampa, FL 33606-1490
United States
8132533163 (Phone)

Pradeep K. Yadav (Contact Author)

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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