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.
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.