Corporate Financial Performance and the Use of Takeover Defenses

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This paper tests the hypothesis that the threat of a contested takeover improves corporate performance. This is done by a cross-sectional analysis of listed Danish firms with and without effective takeover defenses. Takeover defenses adopted by Danish firms mainly consist of dual class voting rights often in combination with foundation ownership. Using simultaneous equation estimation to deal with the problem of causation, the results show that unprotected firms do not outperform protected firms. This suggests that management in unprotected firms are disciplined by other corporate governance mechanisms than the market for corporate control, including the legal protection of shareholders.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherInstitut for Finansiering, Copenhagen Business School
Number of pages36
ISBN (Print)8790705513
Publication statusPublished - 2001
SeriesWorking Papers / Department of Finance. Copenhagen Business School


  • Takeovers
  • Company law
  • Corporate control
  • Corporate governance
  • Simultaneous equation estimation

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