antitakeover statute

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Antitakeover Statute

A law at the state level prohibiting hostile takeovers in certain circumstances. Different states have different antitakeover statutes, but most involve some way of limiting a potential acquirer's ability to take a bid directly to shareholders. Critics contend that these laws can work against shareholder interest, while proponents maintain that they promote stability in publicly-traded companies. Antitakeover statutes can only apply to companies registered in states having such laws.

antitakeover statute

A state law that makes it easier for a firm based in that state to fend off a takeover hostile to the firm's management. Such a statute may actually penalize shareholders since acquisition-minded firms or individuals may be less likely to make an offer for the firm's stock.
References in periodicals archive ?
TABLE 1: PROBABILITY OF BECOMING A HEDGE FUND TARGET AND STATE ANTITAKEOVER STATUTES This table presents the marginal effects estimates from logit regressions of the ex-ante probability of becoming a hedge fund target next year on different state antitakeover statutes and firm- level controls as of the end of this year.
view that antitakeover statutes do not matter after all.
Qi and Wald (2008) determine that debt holders use more debt covenants to minimize agency costs when borrowers are incorporated in states with stronger antitakeover statutes.
Capital Structure and Corporate Control: The Effect of Antitakeover Statutes on Firm Leverage.
See Field & Karpoff, supra note 74, at 1865 (describing how California has no significant antitakeover laws); Guhan Subramanian, The Influence of Antitakeover Statutes on Incorporation Choice: Evidence on the "Race" Debate and Antitakeover Overreaching, 150 U.
Indeed, the market for incorporations has not even penalized the three states that passed severe antitakeover statutes which have been viewed as detrimental to shareholders.
State antitakeover statutes clearly apply to publicly held companies incorporated in the state.
Many of the ideas are occasioned by the subject of their chapter 8, entitled "The Incorporation Debate and State Antitakeover Statutes," in which "two of |the book's~ themes run headlong into each other.
Because managers decided where the firm incorporated, managers could now protect their jobs by incorporating in states with antitakeover statutes, and states could now boost tax revenues by providing them a haven.
If you lift the pill for us and approve our future purchases for purposes of the applicable Indiana antitakeover statutes, it would be our intention to purchase additional shares.
In this Article, we presented our legal argument for why most antitakeover statutes have no or only a minimal impact on the ability of a target to resist a hostile bid.
We create an antitakeover index and a payout restriction variable for each state to proxy for the variation in antitakeover statutes and payout restriction laws across states.