Antitakeover provisions in IPOs: A growth options perspective

摘要: Why have antitakeover provisions spread amongst IPOs while shareholders have moved against such provisions in seasoned firms? We address this question by focusing on the mix of a firm’s value in assets-in-place and growth options. We argue that firms with more of their value in growth options will tend to use more antitakeover provisions, particularly internal provisions, to maximize the value of their growth options. Using a sample of IPOs after the Internet bubble, we find evidence for:(1) a positive, not negative, correlation between antitakeover provisions and IPO valuations,(2) a positive correlation between the R&D intensity of a firm and its use of antitakeover provisions, and (3) a difference between seasoned and unseasoned firms use of antitakeover provisions when conditioned on their growth options. Altogether, this evidence is consistent with the importance of managerial effort in maximizing the value of …