Anti-Takeover Amendments, Managerial Entrenchment, And Shareholders' Interests

Atreya Chakraborty () and Christopher Baum

No 220, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper focuses on testing alternative hypotheses that relate the adoption of anti-takeover defences to the financial characteristics of firms that adopt them. We focus on the creation of a composite measure of anti-takeover defences and then relate the intensity of this measure to the motives for instituting these defences. Our estimates indicate that while the intensity of takeover defences is negatively related to Tobin's Q and financial leverage to a significant degree, proxies for inside information play no casual role in explaining this intensity. We interpret our results as supportive of the managerial entrenchment hypotheses.

Date: 1993-12
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