Takeover Defenses Work. Is That Such a Bad Thing

Abstract

In The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy,1 Professors Lucian Arye Bebchuk, John C. Coates IV, and Guhan Subramanian (BC&S) purport to demonstrate that hostile takeover targets that have a poison pill rights plan and an "effective" staggered board can-"and most of the time do"2-remain independent rather than sell themselves to the initial raider or another buyer. As presented, their findings turn conventional wisdom on its head and justify, in their view, significant "reconsideration" of the law regarding takeover defenses. Are they on to something here? Should we, indeed, be shocked-shocked!-to lear that takeover defenses work?