Price and probability: Decomposing the takeover effects of anti-takeover provisions

Cuñat, V. (Vicente); Giné, M. (Mireia); Guadalupe, M. (Maria)

Authors:

Cuñat, V. (Vicente)

Giné, M. (Mireia)

Guadalupe, M. (Maria)

Keywords:

Anti-takeover provisions (ATPs)
Takeover premium
Takeover probability
Target selection

Issue Date:

2020

Publisher:

Wiley

ISSN:

0022-1082

Note:

This is an open access article under the terms of the Creative Commons Attribution-Non Commercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.

Citation:

Cuñat, V. (Vicente); Giné, M. (Mireia); Guadalupe, M. (Maria). "Price and probability: Decomposing the takeover effects of anti-takeover provisions". Journal of finance. 75 (5), 2020, 2591 - 2629

Abstract

We study the effects of anti-takeover provisions (ATPs) on the takeover probability, the takeover premium, and target selection. Voting to remove an ATP increases both the takeover probability and the takeover premium, that is, there is no evidence of a trade-off between premiums and takeover probabilities. We provide causal estimates based on shareholder proposals to remove ATPs and address the endogenous selection of targets through bounding techniques. The positive premium effect in less protected firms is driven by better bidder-target matching and merger synergies.

URI:

https://hdl.handle.net/10171/67703

DOI:

10.1111/jofi.12908

Appears in Collections:

DA - IESE - Artículos de revista

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