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Do Antitakeover Provisions Spur Corporate Innovation? A Regression Discontinuity Analysis

Journal of financial and quantitative analysis, 2018-06, Vol.53 (3), p.1163-1194 [Peer Reviewed Journal]

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Title:
Do Antitakeover Provisions Spur Corporate Innovation? A Regression Discontinuity Analysis
Author: Chemmanur, Thomas J. ; Tian, Xuan
Subjects: Asymmetric information ; Asymmetry ; Causality ; Discontinuity ; Econometrics ; Equity ; Hypotheses ; Innovations ; Markets ; Meetings ; Moral hazard ; Public companies ; Quantitative analysis ; Regression analysis ; Securities markets ; Shareholder voting ; Stockholders ; Studies
Is Part Of: Journal of financial and quantitative analysis, 2018-06, Vol.53 (3), p.1163-1194
Description: 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.
Publisher: New York, USA: Cambridge University Press
Language: English
Identifier: ISSN: 0022-1090
EISSN: 1756-6916
DOI: 10.1017/S0022109018000029
Source: ProQuest Central

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