Post-Bid Takeover Resistance: Antitakeover Provisions, Initial Offer Quality, and Target Board Motivation

51 Pages Posted: 23 Aug 2019 Last revised: 26 Oct 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: October 24, 2021

Abstract

Unlike Britain and many E.U. countries, it is the board of a U.S. takeover target firm that decides on post-bid resistance. In this context, we investigate the causal impact of existing antitakeover provisions (ATPs) and initial offer quality on the target-board’s decision to resist post-bid. Exploiting instrumental variables, we find a positive relationship from existing ATPs to post-bid resistance, and no causal relationship from initial offer quality to post-bid resistance. We argue that this necessarily implies that the target-board’s decision to resist is, on average, not motivated by good-faith bargaining in stockholder interest. Instead, it is indicative of entrenchment considerations.

Keywords: takeover resistance; antitakeover provisions; initial offer quality; good-faith bargaining; entrenchment

JEL Classification: G34; G38

Suggested Citation

Carline, Nicholas F. and Gogineni, Sridhar and Yadav, Pradeep K., Post-Bid Takeover Resistance: Antitakeover Provisions, Initial Offer Quality, and Target Board Motivation (October 24, 2021). 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 3270 Division of Finance
Norman, OK 73019
United States
4053255591 (Phone)
4053255491 (Fax)

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

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