Blood in the water: The value of antitakeover provisions during market shocks

Guernsey, Scott B.; Sepe, Simone M.; Serfling, Matthew

doi:10.1016/j.jfineco.2021.12.009

Cited by 26 publications

(5 citation statements)

References 76 publications

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“…Antitakeover provisions : ATPs stand in relation to corporate governance (Karpoff et al., 2022; Guernsey et al., 2022), but their impacts on shareholder value and acquirer performance remain open to interpretation. Some research (Cuñat et al., 2020; Gompers et al., 2003; Masulis et al., 2007; Bebchuk et al., 2009; Harford et al., 2012) suggests ATPs shield managerial wealth from market threats, thereby enabling value‐destructive, empire‐building M&As.…”

Section: Resultsmentioning

confidence: 99%

Founder premiums, venture capital investments and acquirer benefits

Xie

2023

Business Fin & Account

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This study investigates whether the retention of founders has a greater impact on deal prices and acquirer benefits compared with the retention of family successors or CEOs when private firms pursue a merger exit strategy. The results demonstrate that higher prices and returns can be achieved when founders remain postmerger. These findings hold up even when considering the acquirer's long‐term operating and market performance, indicating the robustness of the results. Additionally, the study reveals that the effect of founder retention is larger than that of CEO retention, and the effect of founder‐CEO retention is the largest. Furthermore, the study examines multistage investments and exits, revealing that venture capitalists can trade off the benefits of founder maturity and firm growth. This implies that founder premiums vary with the enterprise life cycle. Finally, the study investigates the mechanism behind these results, finding that venture capital backing, high‐tech industry, earnouts and stock‐for‐stock deals as moderators can significantly enhance the founder‐retention effect on acquirer benefits. This study proposes that the specific human capital and entrepreneurial spirit of founders, transcending ownership, emerge as driving forces behind this effect. Founder heterogeneity also suggests that acquirers can benefit more from founder retention when founders are innovative talents or serial entrepreneurs.

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Section: Resultsmentioning

confidence: 99%

Founder premiums, venture capital investments and acquirer benefits

Xie

2023

Business Fin & Account

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“…Our findings offer a perspective into board characteristics that could influence firms' social performance. In particular, we utilize unique data on staggered boards based on machine learning provided by Guernsey et al (2022). A staggered board is a controversial external governance mechanism used to fend off takeover threats, as it makes it more difficult for potential acquirers to wholly replace the target's board at once.…”

Section: Resultsmentioning

confidence: 99%

“…Next, our key variable of interest is whether the board is staggered. The data on staggered boards are available through Guernsey et al (2022), who extract data from DEF 14 filings using machine learning algorithms. This data set on staggered boards has better coverage of firms and time horizon in comparison to the traditional staggered board data provided by the Institutional Shareholder Services (ISS).…”

Section: Data and Modeling Frameworkmentioning

confidence: 99%

“…Next, our key variable of interest is whether the board is staggered. The data on staggered boards are available through Guernsey et al (2022), who extract data from DEF 14 filings using machine learning algorithms. This data set To investigate the effect of a staggered board on the firm's social commitment, we estimate the following panel regression model:…”

Section: Sample and Modelmentioning

confidence: 99%

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Staggered board, social capital and sustainability

Likitapiwat

Treepongkaruna

2022

Corp Soc Responsibility Env

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Maintaining good relationships with internal and external stakeholders can help companies gain competitive advantages and mitigate risks associated with social factors.However, building social capital is not an easy task, as it requires management to prioritize long-term goals over short-term gains. The board of directors is expected to ensure that management maximizes shareholders' value, commits to strengthening its relationship with stakeholders, and engages in socially responsible activities. These expectations depend heavily on the quality and effectiveness of the board. Certain board characteristics may impede its ability to drive long-term vision or create good stakeholder relationships, leading to a decline in the company's social capital. In this paper, we analyze board characteristics of publicly listed US firms, focusing on staggered boards, and find evidence supporting the agency theory that staggered boards adversely affect firms' social capital. To ensure the robustness of our analysis, we conduct additional analyses including propensity score matching, entropy balancing, and instrumental-variable analysis.

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“… 10. Guernsey et al (2022) argue that firm-level ATPs are firm-specific and likely endogenous. Similar to them, we examine state-level ATP laws as an alternative instrumental variable.…”

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confidence: 99%

Another look at the managerial entrenchment hypothesis of acquisitions: A replication of Humphery-Jenner (2014)

Bergh,

Powell,

Zhao

2024

Journal of Management Scientific Reports

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Anti-takeover provisions have long been associated with managerial entrenchment, self-interested strategic behaviors, and lower performance. Humphery-Jenner (2014) offers an opposing view, arguing that anti-takeover provisions can lead to beneficial managerial entrenchment for acquiring firms in hard-to-value industries. These firms are particularly vulnerable to opportunistic takeovers and once shielded from those threats, managers could undertake acquisition strategies that offer positive performance outcomes over a longer-term horizon. We replicate Humphery-Jenner's study to assess the boundaries and generalizability of his hypothesis. After we first reproduce his findings for his sample of 3935 acquisitions occurring between 1990 and 2005, we find no relationship between anti-takeover provisions, acquisitions by firms in hard-to-value industries, and firm performance in both an updated sample of acquisitions (3372 acquisitions made during 2006–2015) and a combined sample encompassing 7307 acquisitions spanning the complete 26-year period (1990–2015). We also find no relationships between anti-takeover provisions and acquisition performance in the replication. Overall, the beneficial managerial entrenchment hypothesis of acquisitions appears to have limits to its generalizability.

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Blood in the water: The value of antitakeover provisions during market shocks

Cited by 26 publications

References 76 publications

Founder premiums, venture capital investments and acquirer benefits

Founder premiums, venture capital investments and acquirer benefits

Staggered board, social capital and sustainability

Another look at the managerial entrenchment hypothesis of acquisitions: A replication of Humphery-Jenner (2014)

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