1 London School of Economics and Political Science · 2 Vicente Cuñat is at LSE. Mireia Gine is with WRDS, University of Pennsylvania and IESE Business School. Maria Guadalupe is with INSEAD. We would like to thank Laurent Bach; Bernard Black; Marco Becht; Emiliano Catan; François Derrien; Andrey Golubov; Denis Gromb; Nadia Malenko; Marco Pagano; Miikk · 3 Andrey Golubov; Antoinette Schoar; Bernard Black; Denis Gromb; Emiliano Catan; François Derrien; Marco Becht; Marco Pagano; Miikka Rokkanen; Nadia Malenko; Rob Shonlau; Vicente Cuñat is at LSE. Mireia Gine is with WRDS, University of Pennsylvania and IESE Business School. Maria Guadalupe is with I
open access
Abstract
We study the effects of anti‐takeover provisions (ATPs) on the takeover probability, the takeover premium, and target selection. Voting to remove an ATP increases both the takeover probability and the takeover premium, that is, there is no evidence of a trade‐off between premiums and takeover probabilities. We provide causal estimates based on shareholder proposals to remove ATPs and address the endogenous selection of targets through bounding techniques. The positive premium effect in less protected firms is driven by better bidder‐target matching and merger synergies.