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The Impact of Antitakeover Amendments on Corporate Financial Performance

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  • Johnson, Mark S
  • Rao, Ramesh P

Abstract

Previous event studies that examine the impact of antitakeover amendments on the firm value provide mixed results. Some studies support the management entrenchment hypothesis, while others support the shareholder interest hypothesis. In this study, a longitudinal approach is used to examine the impact of antitakeover amendments on several financial attributes of the firm including: operating and net income to total assets, operating and overhead expenses to sales, research and development to total sales, capital expenditures to sales, and debt relative to total assets. It is concluded that antitakeover amendments are not deleterious in terms of their impact on various fundamental firm performance measures. Copyright 1997 by MIT Press.

Suggested Citation

  • Johnson, Mark S & Rao, Ramesh P, 1997. "The Impact of Antitakeover Amendments on Corporate Financial Performance," The Financial Review, Eastern Finance Association, vol. 32(4), pages 659-689, November.
    • Handle: RePEc:bla:finrev:v:32:y:1997:i:4:p:659-89
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    Citations

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    Cited by:

    1. Bebchuk, Lucian A. & Cohen, Alma, 2005. "The costs of entrenched boards," Journal of Financial Economics, Elsevier, vol. 78(2), pages 409-433, November.
    2. Nawar Hashem & Mehmet Ugur, 2013. "Corporate governance and innovation in US-listed firms: the mediating effects of market concentration," Chapters, in: Mehmet Ugur (ed.), Governance, Regulation and Innovation, chapter 4, pages 86-121, Edward Elgar Publishing.
    3. Belloc, Filippo, 2010. "Corporate governance and innovation: an organizational perspective," MPRA Paper 21495, University Library of Munich, Germany.
    4. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 107-156.
    5. Nattarinee Denlertchaikul & Pattanaporn Chatjuthamard & Pornsit Jiraporn & Piyachart Phiromswad, 2022. "Do Takeover Threats Stifle or Promote Managerial Efforts to Innovate? Evidence from Takeover Vulnerability, and Text-Based Measure of Innovation," Administrative Sciences, MDPI, vol. 12(3), pages 1-17, August.
    6. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    7. Honoré, Florence & Munari, Federico & van Pottelsberghe de La Potterie, Bruno, 2015. "Corporate governance practices and companies’ R&D intensity: Evidence from European countries," Research Policy, Elsevier, vol. 44(2), pages 533-543.
    8. Tsung-ming Yeh, 2014. "The effects of anti-takeover measures on Japanese corporations," Review of Quantitative Finance and Accounting, Springer, vol. 42(4), pages 757-780, May.
    9. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    10. Rose, Caspar, 2001. "Corporate Financial Performance and the Use of Takeover Defenses," Working Papers 2001-4, Copenhagen Business School, Department of Finance.
    11. Rodrigues, Ricardo & Samagaio, António & Felício, Teresa, 2020. "Corporate governance and R&D investment by European listed companies," Journal of Business Research, Elsevier, vol. 115(C), pages 289-295.
    12. Gigante, Gimede & Angioni, Ottavio, 2023. "The impact of preventive takeover defences on corporate financial performance: Evidence from the US," Finance Research Letters, Elsevier, vol. 55(PA).
    13. Caspar Rose, 2002. "Corporate Financial Performance and the Use of Takeover Defenses," European Journal of Law and Economics, Springer, vol. 13(2), pages 91-112, March.
    14. Omer Unsal & Blake Rayfield, 2020. "Correction to: Corporate governance and employee treatment: Evidence from takeover defenses," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(2), pages 392-416, April.
    15. Rose, Caspar, 2005. "Takeover Defenses' Influence on Managerial Incentives," International Review of Law and Economics, Elsevier, vol. 25(4), pages 556-577, December.

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