The impact of the EU takeover directive on takeover performance and empire building

► Test and predict that Directive entrenches managers and enables empire building. ► Focus on acquirers listed in EU to test Directive's impact on managerial decisions. ► The Directive reduced EU-acquirer returns by 1.127 points, suggesting entrenchment. ► The Directive reduced likelihood of cash payment, suggesting desire to amass cash. ► The Directive increased rates of asset and cash growth, suggesting empire building.