antitakeover statute

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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
To assess the impact of an antitakeover statute (ATS), one must
The law and finance of antitakeover statutes
(78) Like the antitakeover statute at issue in CTS, the Minnesota law creates nonuniformity, but not an inconsistent burden.
Is there a dormant extraterritoriality principle? Commerce clause limits on state antitrust laws
For example, promoters might be attracted to California, which has no antitakeover statute and has not yet validated an important type of poison pill.
The shareholder as Ulysses: some empirical evidence on why investors in public corporations tolerate board governance
This is so because it is a well-known fact of modern American business that Delaware offers quick and inexpensive incorporation, a low corporate tax burden, and flexibility in key corporate structural issues, including staggered terms for directors, limitations on appraisal rights, and an antitakeover statute that promotes fair and efficient negotiation of mergers, to name a few.
Incorporate in Delaware? Yes
Consistent with this assessment, in the recent dispute involving the validity of the pill used by Airgas, none of the briefs gave much consideration to the implications of a ruling invalidating the pill to Delaware's antitakeover statute. Sec David Marcus, The Strange Case of Section 203, Corp.
The law and finance of antitakeover statutes
Race-to-the-bottom theorists point to Maryland's Unsolicited Takeover Act of 1999--by far the most potent antitakeover statute that has appeared to date--as the latest and most extreme manifestation of their view.
The influence of antitakeover statutes on incorporation choice: evidence on the "race" debate and antitakeover overreaching
This analysis is consistent with the history of Delaware's antitakeover statute. It was not until after most states had passed antitakeover statutes driven by noncompetitive motives that Delaware followed suit.
The myth of state competition in corporate law
As observed by Lucian Bebchuk and Alma Cohen, "antitakeover statutes are possibly important not only in what they actually do but also in what they signal.
Activist hedge funds and the corporation
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. Thus, our results may be driven by more dividend payout constraints caused by increased debt covenants after the enactment of antitakeover laws.
Corporate governance and dividend payout policy: a test using antitakeover legislation
111, 134-35 (1987) (finding no direct evidence of a labor/management coalition supporting antitakeover statutes).
An older, balder critique of "toward common sense and common ground?"
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.
Corporate Finance. (Bureau News)
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