Board Structure, Antitakeover Provisions, and Stockholder Wealth

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Research Papers

Board Structure, Antitakeover Provisions, and Stockholder Wealth

July 1995 Number 9516

Authors: Chamu Sundaramurthy, James M. Mahoney, and Joseph T. Mahoney

This paper's regression analyses from a sample of 261 firms that adopted 486 antitakeover provisions (supermajority, classified boards, fair-price, reduction in cumulative voting, anti-greenmail and poison pills) in the 1984-1988 period indicate that the negative market reactions to antitakeover provisions vary depending on firms' board structures. This paper's empirical evidence indicates that while separating the positions of CEO and chairperson of the board reduces the negative effect, increased outsider representation increases negative market reactions.

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28 pages / 1,029 kb

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