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- Title
State Antitakeover Laws and Voluntary Disclosure.
- Authors
Zhao, Yijiang; Allen, Arthur; Hasan, Iftekhar
- Abstract
We test the relationship between takeover protection and voluntary disclosure in a setting of antitakeover laws in a firm’s state of incorporation. After correcting for the endogeneity of firms’ incorporation choices, we find that firms incorporated in states with more antitakeover laws have higher levels of voluntary disclosure and stock market liquidity. Further tests do not support shareholder demands being the driving force for this association. Our findings are consistent with takeover protection and poor disclosure serving as substitute mechanisms for deterring takeovers. Therefore, as antitakeover statutes mitigate takeover threats, they enhance managers’ incentives to disclose more in order to realize capital market benefits.
- Subjects
ANTITAKEOVER strategies; STATE laws; DISCLOSURE; INCORPORATION; LIQUIDITY (Economics); STOCK exchanges; CAPITAL market; STOCKHOLDERS; LAW
- Publication
Journal of Financial & Quantitative Analysis, 2013, Vol 48, Issue 2, p637
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S0022109013000124