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Corporate Financial Performance and the Use of Takeover Defenses

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Author Info
Rose, Caspar (Department of Finance, Copenhagen Business School)
Abstract

This paper tests the hypothesis that the threat of a contested

takeover improves corporate performance. This is done by a cross-sectional

analysis of listed Danish firms with and without effective takeover defenses.

Takeover defenses adopted by Danish firms mainly consist of dual class

voting rights often in combination with foundation ownership. Using

simultaneous equation estimation to deal with the problem of causation, the

results show that unprotected firms do not outperform protected firms. This

suggests that management in unprotected firms are disciplined by other

corporate governance mechanisms than the market for corporate control,

including the legal protection of shareholders.

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File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7169
File Format: application/pdf
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Publisher Info
Paper provided by Copenhagen Business School, Department of Finance in its series Working Papers with number 2001-4.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 40 pages
Date of creation: 30 Apr 2001
Date of revision:
Handle: RePEc:hhs:cbsfin:2001_004

Contact details of provider:
Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark
Phone: +45 3815 3815
Email:
Web page: http://www.cbs.dk/departments/finance/
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For technical questions regarding this item, or to correct its listing, contact: (Lars Nondal).

Related research
Keywords: Takeovers; Company law; Corporate Control; Corporate Governance; Simultaneous equation estimation.;

Find related papers by JEL classification:
C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
K22 - Law and Economics - - Regulation and Business Law - - - Corporation and Securities Law

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April. [Downloadable!] (restricted)
  2. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May. [Downloadable!] (restricted)
  3. Laffont, J. J. & Tirole, J., 1988. "Repeated Auctions of Incentive Contracts, Investment and Bidding Parity with an Application to Takeovers," Working Papers 675, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
    Other versions:
  4. Johnson, Mark S & Rao, Ramesh P, 1997. "The Impact of Antitakeover Amendments on Corporate Financial Performance," The Financial Review, Eastern Finance Association, vol. 32(4), pages 659-89, November.
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This page was last updated on 2009-10-18.

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