TY  - JOUR
AU  - Bebchuk,Lucian Arye
TI  - Why Firms Adopt Antitakeover Arrangements
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10190
PY  - 2003
Y2  - December 2003
UR  - http://www.nber.org/papers/w10190
L1  - http://www.nber.org/papers/w10190.pdf
N1  - Author contact info:
Lucian A. Bebchuk
Harvard Law School
1545 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/495-3138
Fax: 617/812-0554
E-Mail: bebchuk@law.harvard.edu
AB  - Firms going public have increasingly been incorporating antitakeover provisions in their IPO charters, while shareholders of existing companies have increasingly been voting in opposition to such charter provisions. This paper identifies possible explanations for this empirical pattern. Specifically, I analyze explanations based on (1) the role of antitakeover arrangements in encouraging founders to break up their initial control blocks, (2) efficient private benefits of control, (3) agency problems among pre-IPO shareholders, (4) agency problems between pre-IPO shareholders and their IPO lawyers, (5) asymmetric information between founders and public investors about the firm's future growth prospects, and (6) bounded attention and imperfect pricing at the IPO stage.
ER  -