Working Paper Series, Department of Finance, Copenhagen Business School
Corporate Financial Performance and the Use of Takeover Defenses
Abstract: This paper tests the hypothesis that the threat of a
takeover improves corporate performance. This is done by a
analysis of listed Danish firms with and without
effective takeover defenses.
Takeover defenses adopted by Danish firms
mainly consist of dual class
voting rights often in combination with
foundation ownership. Using
simultaneous equation estimation to deal
with the problem of causation, the
results show that unprotected firms
do not outperform protected firms. This
suggests that management in
unprotected firms are disciplined by other
mechanisms than the market for corporate control,
including the legal
protection of shareholders.
Keywords: Takeovers; Company law; Corporate Control; Corporate Governance; Simultaneous equation estimation.; (follow links to similar papers)
JEL-Codes: C31; G32; G34; K22; (follow links to similar papers)
40 pages, April 30, 2001
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