Doctor of Philosophy (PhD)
Despite the prevalent use of anti-takeover provisions (ATPs) based indices as measures of corporate governance quality, the role of ATPs (efficiency vs. entrenchment hypotheses), and their relationship to firm performance are not fully understood. Corporate spin-offs offer a unique opportunity to disentangle entrenchment motives from efficiency motives behind the adoption of ATPs. This setting also provides relatively clean inferences on the relation between ATPs and firm performance. This paper studies the design of ATPs in spun-off firms relative to their parents, the determinants of ATPs, and their relationship to subsequent firm performance. We show that spun-off firms typically are endowed with a higher number of ATPs than their parents, and the additional provisions are mostly delay provisions. Our results on the determinants of ATPs suggest they are more likely to be motivated by efficiency than by entrenchment. Further, in sharp contrast to the negative relationship between ATP indices and equity returns as documented in Gompers, Ishii and Metrick’s (2003) and Bebchuk, Cohen, Ferrell (2004), we find a strong positive relationship between ATP indexes and subsequent stock returns for our sample spun-off firms.
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Du, Wei, "Essay on Anti-takeover Provisions and Corporate Spin-offs" (2015). LSU Doctoral Dissertations. 3901.
Sanger, Gary C.