The commitment value of takeover defenses |
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Authors: | William C Johnson Sungwoo Nam |
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Institution: | 1. Sawyer Business School, Suffolk University, Boston, MA, USA;2. Sogang Business School, Sogang University, Seoul, South Korea |
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Abstract: | We investigate how takeover defenses can facilitate a firm’s value-increasing stakeholder relationships by bonding its commitment to respect stakeholders’ appropriable quasi-rents in the firm. For this purpose, we develop two variations of the B-index of takeover defenses which are specifically designed to capture the bonding benefit of takeover defenses. We find evidence that some takeover defenses, but not all, provide a bonding benefit in terms of facilitation of a firm’s value-increasing stakeholder relationships. This implies that a firm must selectively adopt the most effective takeover defenses to achieve the desired corporate goals. |
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Keywords: | Takeover defenses antitakeover provisions bonding entrenchment B-index |
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