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Are Antitakeover Amendments Good for Shareholders? Evidence from the Adoption of Antitakeover Provisions in the Post-SOX Era

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  • Erin E. Smith

    (U.S. Securities and Exchange Commission, 351 S West Temple, Salt Lake City, UT 84101, USA)

Abstract

By combining a regression discontinuity (RD) design with a novel instrumental variable, I estimate the value of antitakeover provisions (ATPs) adopted between 2006 and 2010. In contrast to evidence from earlier periods, I estimate that, during this recent period, ATP adoption increased shareholder value by approximately 3%. An important challenge to estimating the value of ATPs is that standard RD estimates can be biased if interested parties manipulate vote outcomes. To address this, I exploit exogenous variation in the likelihood of passage that results from “over-votes”, the extra illegitimate votes arising from securities lending practices. Because ATP passage requires affirmative votes from a majority of outstanding shares, rather than of shares voted, over-votes increase the likelihood of passage.

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  • Erin E. Smith, 2019. "Are Antitakeover Amendments Good for Shareholders? Evidence from the Adoption of Antitakeover Provisions in the Post-SOX Era," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 9(04), pages 1-40, December.
    • Handle: RePEc:wsi:qjfxxx:v:09:y:2019:i:04:n:s2010139219500149
    DOI: 10.1142/S2010139219500149
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