The effects of takeover threats on shareholders and firm value

Marco A. Haan; Yohanes Riyanto

doi:10.1016/j.jebo.2004.02.003

The effects of takeover threats on shareholders and firm value

Marco A. Haan^*, Yohanes Riyanto

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

Abstract

We study the role of takeover threats as a corporate control mechanism using [Aghion, P., Tirole, J., 1997. Formal and real authority in organizations. Journal of Political Economy 105, 1-29] model of formal and real authority. Shareholders do not monitor the manager's actions since ownership is widely dispersed. A corporate raider may monitor and step in if a profit opportunity exists. In our model, a takeover threat decreases managerial effort and may increase the value of the shares. We also look at the extent of anti-takeover defenses favored by individual shareholders and institutional investors.

Original language	English
Pages (from-to)	45-68
Number of pages	24
Journal	Journal of Economic Behavior and Organization
Volume	59
Issue number	1
DOIs	https://doi.org/10.1016/j.jebo.2004.02.003
Publication status	Published - Jan 2006
Externally published	Yes

ASJC Scopus Subject Areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

Keywords

Firm
Shareholders
Takeover threats

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10.1016/j.jebo.2004.02.003

Cite this

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AB - We study the role of takeover threats as a corporate control mechanism using [Aghion, P., Tirole, J., 1997. Formal and real authority in organizations. Journal of Political Economy 105, 1-29] model of formal and real authority. Shareholders do not monitor the manager's actions since ownership is widely dispersed. A corporate raider may monitor and step in if a profit opportunity exists. In our model, a takeover threat decreases managerial effort and may increase the value of the shares. We also look at the extent of anti-takeover defenses favored by individual shareholders and institutional investors.

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KW - Shareholders

KW - Takeover threats

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The effects of takeover threats on shareholders and firm value

Abstract

ASJC Scopus Subject Areas

Keywords

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