Capital Structure and Corporate Control: The Effect of Antitakeover Statutes on Firm Leverage

We find that firms protected by "second generation" state antitakeover laws substantially reduce their use of debt, and that unprotected firms do the reverse. This result supports recent models in which the threat of hostile takeover motivates managers to take on debt they would otherwise avoid. An implication is that legal barriers to takeovers may increase corporate slack. Copyright The American Finance Association 1999.

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Year of publication:	1999
Authors:	Garvey, Gerald T. ; Hanka, Gordon
Published in:	Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 54.1999, 2, p. 519-546
Publisher:	American Finance Association - AFA

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005302440