In this paper we use Heckman selection models to analyse the relation between the likelihood of the firm becoming a takeover target, the takeover premium, and the use of anti-takeover devices. Ordinary least squares regressions suggest that anti-takeover devices, especially dual class shares, are associated with a higher takeover premium. However, we also document that anti-takeover devices reduce the likelihood that the firm will be taken over. When we control for the fact that takeover targets are selected, we do not find a significant relation between the takeover premium and dual class shares. Hence, our results suggest that the takeover premium is indeed influenced by private information about the likelihood of takeover.
- 511 Economics
Holmén, M., Nivorozhkin, E., & Rana, R. (2014). Do anti-takeover devices affect the takeover likelihood or the takeover premium? The European Journal of Finance, 20(4), 319-340. https://doi.org/10.1080/1351847X.2012.703141