The Probability to Abolish Governance Provisions

Seoungpil Ahn () and Gwangheon Hong ()

Business and Economic Research, 2016, vol. 6, issue 2, 379-389

Abstract: The negative relation between governance indices and acquisition performance weakens in the post Sarbanes-Oxley Act (SOX) period. We examine whether firms remove anti-takeover provisions to eliminate the adverse impact of anti-takeover provisions. We find that strong external monitoring mechanisms such as the presence of public pension funds and large institutional investors leads firms to abolish some anti-takeover provisions and classified boards in particular. This partial elimination of anti-takeover provisions suggests a trade-off between benefit and cost of anti-takeover provisions.

Keywords: Anti-takeover provisions; Governance mechanism; Institutional investors; Industry competition (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2016
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