Business, Management and Accounting
8 years ago

Anti-takeover provisions lead to lower returns for acquiring firms.

SSRN Electronic Journal
Corporate Governance and Acquirer Returns
Ronald W. Masulis, Cong Wang, Fei Xie

Paper Summary

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The study looked at how corporate governance affects the success of company acquisitions. Companies with more anti-takeover rules had lower stock returns after announcing acquisitions. However, firms in competitive industries or with separate CEO and chairman roles had higher returns. This suggests that strict anti-takeover rules can lead to bad acquisitions that hurt shareholders.