Takeover Protections and Asset Prices

• 成果类型: Article
• 署名作者: Eisdorfer, Assaf; Morellec, Erwan; Zhdanov, Alexei
• 署名单位: University of Connecticut; Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne; University of Geneva; Centre for Economic Policy Research - UK; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.03111
• 发表日期: 2024
• 关键词: equity risk; stock returns; bond yields; leverage; takeovers

摘要

We study the effects of takeover feasibility on asset prices and returns in a unified framework. We show theoretically that takeover protections increase equity risk, stock returns, and bond yields by removing a valuable put option to sell the firm, notably for firms approaching distress. We investigate these claims empirically and find that distressed firms experience a significant decrease in value and increase in returns and market betas after the passage of antitakeover laws, in line with our predictions. At issue bond yields are also higher when an antitakeover law is in effect. Consistent with the model, the effects of antitakeover laws on stock returns, respectively, bond yields, are greater when shareholders, respectively, bondholders, have greater bargaining power.