The Law and Finance of Anti-Takeover Statutes

Catan, Emiliano; Kahan, Marcel

doi:10.2139/ssrn.2517594

Cited by 36 publications

(50 citation statements)

References 7 publications

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“…First, our results and data provide both the motivation and the means to improve the specification of tests that use antitakeover laws to identify changes in firms’ takeover defenses. Second, our results, along with those of Cain, McKeon, and Solomon () and Catan and Kahan (), highlight the paucity of empirical research on whether and how individual firm‐ and state‐level takeover defenses affect firms’ takeover protection and how these defenses interact. Third, our findings support explicit recognition of the importance of inductive inference in empirical corporate finance research, especially regarding legal changes to firms’ takeover protections.…”

Section: First‐generation State Antitakeover Laws 1968 To 1982supporting

confidence: 58%

“…Catan and Kahan's () argument regarding shadow poison pills supports claims that classified boards are the only defense that conveys incremental takeover protection (e.g., Bates, Becher, and Lemmon ()). Again, we agree that classified boards and poison pills combine to offer a strong takeover defense.…”

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 89%

“…Consistent with this assumption, Lipton and Steinberger (, pp. 6–76) and Catan and Kahan (, p. 636) cite court decisions in which poison pills were invalidated for companies from New York, New Jersey, Georgia, Wisconsin, Colorado, and Virginia. Each of these states passed a law to establish firms’ rights to deploy poison pills soon after its related court decision.…”

Section: Court Decisions That Affect Firms’ Takeover Protectionmentioning

confidence: 99%

“…In related papers, Catan and Kahan () and Cain, McKeon, and Solomon () also pose questions about the use of state antitakeover laws to identify exogenous changes in firms’ takeover protections. Like our paper, both of these studies argue that state antitakeover laws are not adopted in an institutional vacuum and that legal context matters.…”

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 99%

“…Catan and Kahan's () critique of the literature is more sweeping. Catan and Kahan (CK) build upon observation in Coates () and Klausner () that virtually all firms have the ability to adopt poison pills at any time, even after receiving an unsolicited takeover bid.…”

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 99%

See 4 more Smart Citations

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Karpoff¹,

Wittry²

2018

The Journal of Finance

223

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We argue and demonstrate empirically that a firm's institutional and legal context has first‐order effects in tests that use state antitakeover laws for identification. A priori, the size and direction of a law's effect on a firm's takeover protection depends on (i) other state antitakeover laws, (ii) preexisting firm‐level takeover defenses, and (iii) the legal regime as reflected by important court decisions. In addition, (iv) state antitakeover laws are not exogenous for many easily identifiable firms. We show that the inferences from nine prior studies related to nine different outcome variables change substantially when we include controls for these considerations.

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Section: First‐generation State Antitakeover Laws 1968 To 1982supporting

confidence: 58%

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 89%

Section: Court Decisions That Affect Firms’ Takeover Protectionmentioning

confidence: 99%

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 99%

Section: Comments On An Extreme View Of Shadow Poison Pillsmentioning

confidence: 99%

See 3 more Smart Citations

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Karpoff¹,

Wittry²

2018

The Journal of Finance

223

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Innovation, short‐termism, and the cost of strong corporate governance

Keum

2020

Strategic Management Journal

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Do the performance pressures of the capital market exacerbate short-termism and stifle innovation? This longstanding question has doggedly eluded a conclusive answer due to conflicting empirical findings. We revisit two studies that have been central to rejecting short-termism: Atanassov (2013) and its replication by Karpoff and Wittry (2018). After revising some of the empirical choices by Atanassov (2013), we find the opposite result: antitakeover laws that insulate managers from the market for corporate control enhance innovation, driven by firms with significant ownership by short-term oriented investors. However, antitakeover laws do exacerbate the pursuit of valuedestroying acquisitions. Our findings highlight corporate governance as a strategic variable that imposes a tradeoff in disciplining different agency conflicts and weak governance as a necessary evil to stimulate innovation. Managerial Summary: We present evidence that shareholder pressure indeed exacerbates short-termism and stifles innovation, especially in firms with significant ownership by short-term oriented investors. One key implication is that calls to reduce managerial entrenchment and hold managers more accountable to shareholders warrant careful consideration. While curbing other forms of agency conflict, such as managerial shirking and the pursuit of value-destroying

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Kraft's acquisition of Cadbury: Was it an amicable transatlantic merger or a hostile takeover?

Anwar

2018

Thunderbird Intl Bus Rev

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This case-based research evaluates and discusses Kraft's 2009-2010 acquisition of the UKbased Cadbury, which turned into a bitter fight and a hostile takeover. As both firms have a rich history and distinct brand identities, the merger came to the attention of the global media and public on both sides of the Atlantic. Drawing on the merger's lengthy negotiations and the two companies' distinctive corporate cultures, this article analyzes the merger and its chaotic negotiations and developments. The merger was opposed in the United Kingdom because of Kraft's harsh approach of targeting an iconic British brand that had been in business for over 150 years.Eventually, both companies did compromise in an amicable manner and concluded a friendly tieup. The postmerger period reveals that Kraft's acquisition was a part of its future reorganization and expansion in global markets. This case-based research also provides academic and practical implications for international business managers as well as multinational corporations.

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The Law and Finance of Anti-Takeover Statutes

Cited by 36 publications

References 7 publications

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Innovation, short‐termism, and the cost of strong corporate governance

Kraft's acquisition of Cadbury: Was it an amicable transatlantic merger or a hostile takeover?

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