The Lifecycle Effects of Corporate Takeover Defenses

The Lifecycle Effects of Corporate Takeover Defenses

William C. Johnson, Jonathan Karpoff, Sangho Yi

Series number :

Serial Number: 

Date posted :

May 14 2021

Last revised :

July 13 2021
SSRN Share


  • takeover defenses • 
  • Antitakeover Provisions • 
  • value reversal • 
  • lifecycle

We document that the relation between firm value and the use of takeover defenses is positive for young firms but becomes negative as firms age. This value reversal pattern reflects specific changes in the costs and benefits of takeover defenses as firms age and arises because defenses are sticky and rarely removed.

Firms can attenuate the value reversal by removing defenses, but do so only when the defenses become very costly and adjustment costs are low. The value reversal explains previous mixed evidence about takeover defenses and implies that firm age proxies for takeover defenses’ heterogeneous impacts on firm value.

Published in

Published in: 
Publication Title: 
Forthcoming, The Review of Financial Studies


Real name:
William C. Johnson
Real name:
Sangho Yi