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Do anti-takeover devices affect the takeover likelihood or the takeover premium?

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  • Martin Holmén
  • Eugene Nivorozhkin
  • Rakesh Rana

Abstract

In this paper, we use Heckman selection models to analyse the relation between the likelihood of the firm becoming a takeover target, the takeover premium, and the use of anti-takeover devices. Ordinary least squares regressions suggest that anti-takeover devices, especially dual class shares, are associated with a higher takeover premium. However, we also document that anti-takeover devices reduce the likelihood that the firm will be taken over. When we control for the fact that takeover targets are selected, we do not find a significant relation between the takeover premium and dual class shares. Hence, our results suggest that the takeover premium is indeed influenced by private information about the likelihood of takeover.

Suggested Citation

  • Martin Holmén & Eugene Nivorozhkin & Rakesh Rana, 2014. "Do anti-takeover devices affect the takeover likelihood or the takeover premium?," The European Journal of Finance, Taylor & Francis Journals, vol. 20(4), pages 319-340, April.
    • Handle: RePEc:taf:eurjfi:v:20:y:2014:i:4:p:319-340
    DOI: 10.1080/1351847X.2012.703141
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    Cited by:

    1. Guo, Jie & Li, Xi & Seeger, Nicolas Cisternas & Vagenas-Nanos, Evangelos, 2019. "Social connections, reference point and acquisition premium," The British Accounting Review, Elsevier, vol. 51(1), pages 46-71.

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