Corporate Takeover Defenses
Fisher College of Business Working Paper No. 2022-03-009
Charles A. Dice Center Working Paper No.2022-9
European Corporate Governance Institute – Finance Working Paper No. 843/2022
The Handbook of Corporate Finance, edited by David Denis, 2023
65 Pages Posted: 7 Sep 2022 Last revised: 9 May 2023
Date Written: April 1, 2023
Abstract
Takeover defenses, also called antitakeover provisions, reflect decades of innovation in the interplay of offensive and defensive tactics in the market for corporate control. This paper summarizes research on how firms use takeover defenses and how defenses affect firm value and operations. Recent evidence shows that defenses convey both costs and benefits that vary across firms and over an individual firm’s life – helping to explain the mixed empirical results in many earlier studies. We also review evidence on the extent to which takeover defenses work to forestall takeovers, and the costs and benefits of adding or removing takeover defenses. We conclude by identifying unresolved issues about takeover defenses and questions for future research.
Keywords: Takeover defenses, antitakeover provisions, managerial entrenchment, shareholders’ interest, value reversal, lifecycle effects
JEL Classification: G34; K22; L51
Suggested Citation: Suggested Citation