Takeover Defenses' Influence on Managerial Incentives

This article examines how takeover defenses influence managerial incentives with respect to long-term investments, excess liquidity and capital structure. The article presents a cross-sectional regression based on a sample of listed Danish firms and deals explicitly with the problem of causation between the variables. Takeover defenses adopted by Danish firms mainly consist of shares with dual class voting rights, which are often combined with foundation ownership. The article finds that protected firms have significantly less debt to equity. However, protected firms are not significantly more oriented towards the long-term and do not have significantly more excess liquidity.