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ANTITAKEOVER CHARTER AMENDMENTS: EFFECTS ON CORPORATE DECISIONS
Author(s) -
Pugh William N.,
Page Daniel E.,
Jahera John S.
Publication year - 1992
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1992.tb00786.x
Subject(s) - shareholder , charter , argument (complex analysis) , capital (architecture) , business , control (management) , empirical research , accounting , economics , monetary economics , finance , corporate governance , law , political science , management , biochemistry , chemistry , philosophy , archaeology , epistemology , history
In recent years many shareholders have voted to amend their corporate charters to decrease the likelihood of a hostile takeover. Critics of antitakeover amendments argue that by sheltering management from the market for corporate control, management may become entrenched and be less likely to act in the best interest of shareholders. The counter argument holds that the threat of a hostile takeover and possible job loss may move management toward “short‐sighted” decision making. In this study we test the hypothesis that, upon passage of antitakover amendments, managers adopt a longer‐term view with respect to capital expenditures and research and development. Empirical results support the hypothesis, as both capital expenditures and research development display significant increases relative to the year of enactment.