Antitakeover provisions and CEO monetary benefits: Revisiting the E-index |
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| Affiliation: | 1. ESSEC Business School, 3, avenue Bernard Hirsch, 95021 Cergy-Pontoise, France;2. Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, ON M5S 3E6, Canada;1. US Securities and Exchange Commission, Division of Economic and Risk Analysis, Washington, DC 20549, USA;2. Lundquist College of Business, University of Oregon, Eugene, OR 97403, USA;3. School of Law, University of California, Berkeley, CA 94720, USA |
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| Abstract: | We analyze and group antitakeover provisions as they relate to CEO’s monetary benefits. We specifically focus on the determinants of the six E-index provisions that were proposed by Bebchuk et al. (2009) to conversely affect firm value. The six provisions are split into two indices: those that provide managers with a monetary benefit if a takeover was successful (MB provisions) and those that do not (TP provisions). Results indicate that CEOs with a role duality use their power to influence the adoption of MB provisions and resist the adoption of TP provisions. Moreover, in the presence of CEO duality, the relationship between MB provisions and firm value worsens. On the other hand, the relationship between TP provisions and firm value is unaffected by the presence of CEO duality. This suggests that CEOs having a role duality do not feel the need to work in the shareholders’ best interest when entrenched with MB provisions. Our findings suggest that studying all the provisions of the E-index as a whole can be misleading in some cases. |
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| Keywords: | Corporate governance Antitakeover provisions CEO duality Managerial entrenchment |
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