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Takeover Defenses and Dilution: A Welfare Analysis

Published online by Cambridge University Press:  06 April 2009

Atreya Chakraborty  and
Richard Arnott
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Abstract

Existing theory suggests that, in an unregulated market for corporate control, the level of takeovers is suboptimal because shareholders do not receive the full benefit from them. However, existing theory neglects that the threat of takeover may divert managerial effort from productive to defensive activities. This paper shows that, when this is considered, takeovers may, in fact, be excessive.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 36 , Issue 3 , September 2001 , pp. 311 - 334
Copyright
Copyright © School of Business Administration, University of Washington 2001

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