Antitakeover provisions in corporate spin-offs

Thomas J. Chemmanur, Bradford D. Jordan, Mark H. Liu, Qun Wu

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

We analyze the relation between antitakeover provisions (ATPs) and the performance of spin-off firms. We find that firms protected by more ATPs before spin-offs have higher abnormal announcement returns and greater improvements in post-spin-off operating performance than firms with fewer ATPs. Further, firms that reduce the number of ATPs after spin-offs have greater improvements in operating performance than firms that do not reduce the number of ATPs. Finally, CEOs of pre-spin-off firms tend to retain more ATPs in parent firms and assign fewer ATPs to the spun-off units if they remain as the CEOs of the parents but not the spun-off units. Overall, our results indicate a positive relation between ATPs and the value gains to spin-offs.

Original languageEnglish
Pages (from-to)813-824
Number of pages12
JournalJournal of Banking and Finance
Volume34
Issue number4
DOIs
StatePublished - Apr 2010

Keywords

  • Antitakeover provisions
  • Managerial entrenchment
  • Shareholders' interest
  • Spin-offs

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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