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Takeover threats, antitakeover amendments and stock price reaction
Author(s) -
Lauterbach Beni,
Malitz Ileen B.,
Vu Joseph
Publication year - 1991
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090120611
Subject(s) - shareholder , stock price , business , stock (firearms) , monetary economics , position (finance) , sample (material) , stock market , economics , finance , financial system , corporate governance , biology , mechanical engineering , paleontology , chemistry , chromatography , horse , series (stratigraphy) , engineering
We examine the influence of takeover threats on the stock price of firms proposing antitakeover amendments. Stock prices of the majority of firms, which are not takeover targets during the four years surrounding the amendments, are unaffected, while prices of firms that become takeover targets within two years increase significantly. We document weak evidence of wealth losses only for a sample of prior targets. Our findings suggest that shareholders of the average firm are not harmed by antitakeover amendments because they provide either a better bargaining position or an information signal to the market.