Breadcrumb

 
 

Management Quality and Antitakeover Provisions

Title:

Management Quality and Antitakeover Provisions

Chemmanur, Thomas J. and Paeglis, Imants and Simonyan, Karen (2011) Management Quality and Antitakeover Provisions. Journal of Law and Economics, 54 (3). pp. 651-692. ISSN 00222186

[img]
Preview
PDF - Published Version
173Kb

Official URL: http://dx.doi.org/10.1086/655805

Abstract

We present the first empirical analysis of the relationship between a firm’s management quality and the prevalence of antitakeover provisions in its corporate charter and their influence on initial public offering (IPO) valuation and post-IPO performance. We test the implications of the managerial entrenchment hypothesis, which implies that antitakeover provisions serve only to enhance the control benefits of incumbent management, and the long-term value creation hypothesis, which implies that such provisions can enhance value in the hands of higher quality management. We find that, first, firms with higher quality management and greater growth options are associated with a greater number of antitakeover provisions. Second, firms with higher management quality and a greater number of antitakeover provisions outperform other firms in the sample in terms of post-IPO operating and stock return performance and obtain higher IPO valuations. Our findings reject the managerial entrenchment hypothesis and support the long-term value creation hypothesis.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Article
Refereed:Yes
Authors:Chemmanur, Thomas J. and Paeglis, Imants and Simonyan, Karen
Journal or Publication:Journal of Law and Economics
Date:2011
ID Code:974528
Deposited By:ANDREA MURRAY
Deposited On:06 Aug 2012 16:39
Last Modified:06 Aug 2012 16:39
All items in Spectrum are protected by copyright, with all rights reserved. The use of items is governed by Spectrum's terms of access.

Repository Staff Only: item control page

Document Downloads

More statistics for this item...

Concordia University - Footer