Template-Type: ReDIF-Paper 1.0
Author-Name: Roosenboom, P.G.J.
Author-Name-Last: Roosenboom
Author-Name-First: Peter
Author-Name: van der Goot, T.
Author-Name-Last: van der Goot
Title: Takeover defenses and IPO firm value in the Netherlands
Abstract: The central question of this study involves the relation between the use of takeover defenses and IPO firm value. We report that management frequently uses takeover defenses before taking the firm public. The use of takeover defenses is primarily motivated by managerial entrenchment. IPO investors anticipate potential conflict of interests with management and reduce the price they pay for the IPO shares if takeover defenses are adopted. Although managers internalize this cost of takeover defenses to the degree they own pre-IPO stock, they are likely to gain through private control benefits. Non-management pre-IPO owners lose. Their shares are worth less, but different from managers, they do not get offsetting private control benefits. We infer that managers use takeover defenses to protect private control benefits at non-management pre-IPO owners' expense.
Creation-Date: 2003-06-19
File-URL: https://repub.eur.nl/pub/433/ERS-2003-049-F&A.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2003-049-ORG
Classification-JEL: G12, G3, G34, M, M41
Keywords: firm valuation, initial public offering, takeover defense
Handle: RePEc:ems:eureri:433