Takeover Protection and Firm Value

Andres Christian (), Jacob Martin () and Lennart Ulrich
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Andres Christian: WHU – Otto Beisheim School of Management, Vallendar, Germany
Jacob Martin: WHU – Otto Beisheim School of Management, Vallendar, Germany

Review of Law & Economics, 2019, vol. 15, issue 1, 46

Abstract: We examine firm value consequences of anti-takeover regulation, exploiting the staggered announcement and implementation of an anti-takeover regulation in the U.K. We show that, on average, takeover protection increases firm value. This effect is partly driven by innovative firms expanding their R&D activities. However, the anti-takeover regulation also increases the value of less productive firms. Anti-takeover regulation could thus constrain highly productive firms from taking over low-productivity firms. Our results imply that, while takeover protection may stimulate innovation, it can distort the allocation of funds by preventing market share from moving from less efficient to more efficient firms.

Keywords: firm value; anti-takeover regulation; productivity; misallocation (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 G38 K22 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/rle-2018-0048

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