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- Title
Do Antitakeover Provisions Spur Corporate Innovation? A Regression Discontinuity Analysis.
- Authors
Chemmanur, Thomas J.; Tian, Xuan
- Abstract
We study the effect of antitakeover provisions (ATPs) on innovation. To establish causality, we use a regression discontinuity approach that relies on locally exogenous variation generated by shareholder proposal votes. We find a positive, causal effect of ATPs on innovation. This positive effect is more pronounced in firms that are subject to a larger degree of information asymmetry and operate in more competitive product markets. The evidence suggests that ATPs help nurture innovation by insulating managers from short-term pressures arising from equity markets. Finally, the number of ATPs contributes positively to firm value for firms involved in intensive innovation activities.
- Subjects
ANTITAKEOVER strategies; INNOVATION management; REGRESSION analysis; SHAREHOLDER activism; INFORMATION asymmetry; COMPETITIVE advantage in business; STOCK exchanges; ENTERPRISE value
- Publication
Journal of Financial & Quantitative Analysis, 2018, Vol 53, Issue 3, p1163
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S0022109018000029