Corporate Governance and Anti‐Takeover Devices: evidence from Australia

Abstract

This paper seeks to establish what form of management structure, ownership structure and financial characteristics are exhibited by firms that propose and subsequently adopt anti‐takeover charter amendments (ATCAs) in Australia over the period June 1986 to December 1990. An ATCA is a restriction of partial takeover activity implemented though shareholder approval to changes in a firm’s constitution. Approval for such changes is obtained through majority agreement from a plebiscite of shareholders. The study adopts a control sample design to analyse if characteristics differ statistically from adopting ATCA firms and those which do not adopt ATCAs during the investigation period. Following this, a logit analysis establishes the importance of variables considered to have a role in distinguishing between ATCA adoptees and firms without ATCAs. This research is motivated by the fact that little is known about the reasons for alternative corporate governance structures in Australia and is a natural extension to Armstrong, Lange and Woo (1994) which determined that firms adopting ATCAs were likely to experience increases in firm value around the announcement date of the ATCA.

Ultimate Institutional Owner and Takeover Defenses in the Controlling versus Minority Shareholders Context

“…The bylaws establish that the re-election for the board take place in a staggered fashion, generally with one-half or one-third being renewed every two years. Malatesta and Walkling, 1988;Kabir et al, 1997;Lange et al, 2000;Field and Karpoff, 2002). However, this study centers on the identification of the ultimate owner as non-specification of part of the ownership relations may lead to a dual error.…”

“…Ultimate Institutional Owner. Many of the studies analyzing ownership structure focus on immediate ownership, using various measures of concentration, including ownership in the hands of the largest shareholders and ownership by management (e.g., Malatesta and Walkling, 1988; Kabir et al , 1997; Lange et al ., 2000; Field and Karpoff, 2002). However, this study centers on the identification of the ultimate owner as non‐specification of part of the ownership relations may lead to a dual error.…”

Directors’ Recommendations in Takeovers: An Agency and Governance Analysis

“…6 6 Refer to Holl and Kyriazis (1997) for a discussion of the defence strategies employed by target companies in takeovers in the UK, and Lange, Ramsay and Woo (2000) for information about the sole pre‐emptive anti‐takeover device authorised by the Australian Corporations Legislation which relates to proportional takeover bids only. …”

“…SeeMayanja (1999) for a discussion of the Australian case law relating to corporate transactions which have been legally challenged as being 'informal' takeover defence strategies. 6 Refer toHoll and Kyriazis (1997) for a discussion of the defence strategies employed by target companies in takeovers in the UK, andLange, Ramsay and Woo (2000) for information about the sole pre-emptive anti-takeover device authorised by the Australian Corporations Legislation which relates to proportional takeover bids only.…”

Managerial entrenchment of anti-takeover devices: Quasi-experimental evidence from Korea

“…There are a limited number of exceptions, which includeLange, Ramsay, and Woo (2000) that studies Australian anti-takeover devices andArikawa and Mitsusada (2008) andKato, Fabre, and Westerholm (2009) that studies poison pills in Japan.4 To constitute a natural experiment, (i) we need to have an exogenous shock and (2) this shock must be treated to a subset so that we have a control group, against which we evaluate the treatment effect. The setting we investigate in our paper, however, lacks the second requirement, which is why we do not use the term natural experiment, but prefer to use the term quasi-experiment.…”