Takeover defenses in the era of shareholder activism

This paper examines the interplay between takeover defenses and shareholder activism. Using a comprehensive sample of shareholder activism events between 2006 and 2014, I find a differential impact of takeover defense measures on the likelihood of being targeted for activism; a dual-class structure...

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Main Author: SHIN, Sa-Pyung Sean
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2016
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Online Access:https://ink.library.smu.edu.sg/soa_research/1578
https://ink.library.smu.edu.sg/context/soa_research/article/2605/viewcontent/SSRN_id2842695.pdf
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spelling sg-smu-ink.soa_research-26052017-08-08T09:56:38Z Takeover defenses in the era of shareholder activism SHIN, Sa-Pyung Sean This paper examines the interplay between takeover defenses and shareholder activism. Using a comprehensive sample of shareholder activism events between 2006 and 2014, I find a differential impact of takeover defense measures on the likelihood of being targeted for activism; a dual-class structure or a staggered board deters activism, whereas firms with a poison pill in place are more likely to become targets. Activists are more likely to demand removal of takeover defense measures and/or sale of the target firm if the firm has a staggered board or a poison pill in place, suggesting that when takeover defenses block the market for corporate control, activists promote changes through their interventions. I also find that target firms with takeover defenses are more likely to remove those defenses and more likely to be acquired following activism, which suggests that activism can act as an antidote to takeover defenses. Finally, while many target firms adopt a poison pill in response to activist approaches, I do not find evidence that it makes for an effective defense. 2016-04-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1578 info:doi/10.2139/ssrn.2842695 https://ink.library.smu.edu.sg/context/soa_research/article/2605/viewcontent/SSRN_id2842695.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Shareholder Activism Hedge Fund Activism Takeover Defense Staggered Board Classified Board Shareholder Rights Plan Poison Pill Dual-class Shares Business and Corporate Communications Corporate Finance
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Shareholder Activism
Hedge Fund Activism
Takeover Defense
Staggered Board
Classified Board
Shareholder Rights Plan
Poison Pill
Dual-class Shares
Business and Corporate Communications
Corporate Finance
spellingShingle Shareholder Activism
Hedge Fund Activism
Takeover Defense
Staggered Board
Classified Board
Shareholder Rights Plan
Poison Pill
Dual-class Shares
Business and Corporate Communications
Corporate Finance
SHIN, Sa-Pyung Sean
Takeover defenses in the era of shareholder activism
description This paper examines the interplay between takeover defenses and shareholder activism. Using a comprehensive sample of shareholder activism events between 2006 and 2014, I find a differential impact of takeover defense measures on the likelihood of being targeted for activism; a dual-class structure or a staggered board deters activism, whereas firms with a poison pill in place are more likely to become targets. Activists are more likely to demand removal of takeover defense measures and/or sale of the target firm if the firm has a staggered board or a poison pill in place, suggesting that when takeover defenses block the market for corporate control, activists promote changes through their interventions. I also find that target firms with takeover defenses are more likely to remove those defenses and more likely to be acquired following activism, which suggests that activism can act as an antidote to takeover defenses. Finally, while many target firms adopt a poison pill in response to activist approaches, I do not find evidence that it makes for an effective defense.
format text
author SHIN, Sa-Pyung Sean
author_facet SHIN, Sa-Pyung Sean
author_sort SHIN, Sa-Pyung Sean
title Takeover defenses in the era of shareholder activism
title_short Takeover defenses in the era of shareholder activism
title_full Takeover defenses in the era of shareholder activism
title_fullStr Takeover defenses in the era of shareholder activism
title_full_unstemmed Takeover defenses in the era of shareholder activism
title_sort takeover defenses in the era of shareholder activism
publisher Institutional Knowledge at Singapore Management University
publishDate 2016
url https://ink.library.smu.edu.sg/soa_research/1578
https://ink.library.smu.edu.sg/context/soa_research/article/2605/viewcontent/SSRN_id2842695.pdf
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