Which antitakeover provisions deter takeovers?

Abstract

Antitakeover provisions play a central role in corporate governance research. But there is little agreement over which, if any, provisions affect takeover likelihoods. As a result, researchers variously use the G-index, E-index, ad hoc indices, or selected individual provisions such as classified boards, to measure firms’ takeover defenses. In tests that account for the endogenous use of antitakeover provisions, we find that 11 of the 24 G-index provisions are robustly and negatively related to takeover likelihood. Various indices used in the literature to measure takeover defense relate to takeover likelihood to the extent they include this subset of provisions.