Antitakeover provisions in corporate spin-offs |
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Authors: | Thomas J Chemmanur Bradford D Jordan Mark H Liu Qun Wu |
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Institution: | 1. Carroll School of Management, Boston College, Chestnut Hill, MA, USA;2. Gatton College of Business and Economics, University of Kentucky, Lexington, KY, USA;3. Division of Economics and Business, SUNY Oneonta, Oneonta, NY, USA |
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Abstract: | We analyze the relation between antitakeover provisions (ATPs) and the performance of spin-off firms. We find that firms protected by more ATPs before spin-offs have higher abnormal announcement returns and greater improvements in post-spin-off operating performance than firms with fewer ATPs. Further, firms that reduce the number of ATPs after spin-offs have greater improvements in operating performance than firms that do not reduce the number of ATPs. Finally, CEOs of pre-spin-off firms tend to retain more ATPs in parent firms and assign fewer ATPs to the spun-off units if they remain as the CEOs of the parents but not the spun-off units. Overall, our results indicate a positive relation between ATPs and the value gains to spin-offs. |
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Keywords: | G30 G34 G38 |
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