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Corporate financial policy and corporate control

Journal of Financial Economics 1988 20, 87-127
This paper presents evidence that stockholder wealth declines on average when managers respond to attempted hostile takeovers with defensive changes in asset and ownership structure. The data also indicate that these corporate restructurings are typically quite large and that many are attempts by managers to create barriers specific to the hostile bidder and /or to consolidate a block of voting securities in the hands of management allies. The evidence suggests that defensive motives (whether beneficial or harmful) influence corporate asset and ownership structure.