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Takeover Defences and Shareholder Voting


  • Austen-Smith, David
  • O'Brien, Patricia C


Why do shareholders vote for anti-takeover devices that apparently lower the value of their firm? The authors address this question by constructing an agenda-setting model in which rational, informed and value-maximizing shareholders vote on requests for such devices made by a self-interested management with employment opportunities outside the firm. They find sufficient conditions for the value of the firm to decline as a result of a request, although it is approved by shareholders. In their model, the apparently paradoxical voting behavior occurs because the expected takeover premium would be reduced more by rejection of the request than by approval, so shareholders rationally choose approval. Copyright 1992 by The London School of Economics and Political Science.

Suggested Citation

  • Austen-Smith, David & O'Brien, Patricia C, 1992. "Takeover Defences and Shareholder Voting," Economica, London School of Economics and Political Science, vol. 59(234), pages 199-219, May.
  • Handle: RePEc:bla:econom:v:59:y:1992:i:234:p:199-219

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    Cited by:

    1. repec:ipg:wpaper:2014-531 is not listed on IDEAS
    2. James M. Mahoney & Chamu Sundaramurthy & Joseph T. Mahoney, 1995. "The differential impact on stockholder wealth of various antitakeover provisions," Research Paper 9512, Federal Reserve Bank of New York.
    3. Bruno-Laurent Moschetto & Frédéric Teulon, 2015. "Optimisation d’une stratégie anti- opa par limitation linéaire des droits de vote face à un investisseur hostile," Revue économique, Presses de Sciences-Po, vol. 66(6), pages 1067-1088.
    4. repec:ipg:wpaper:2014-604 is not listed on IDEAS

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