An empirical examination of the strategic, managerial, and organizational consequences of antitakeover amendments

This research examined the subsequent strategic, managerial, and organizational consequences of the adoption of antitakeover amendments by U.S. firms. Also examined was whether significant differences were exhibited on these outcomes between a group of firms protected by antitakeover amendments and a comparable group of firms not covered by these protective measures. The strategic consequences of antitakeover amendments were assessed by analyzing measures related to research and development and capital investment expenditures--major determinants of future growth and competitiveness. Managerial welfare was assessed by analyzing measures related to growth rates in sales, assets, and number of employees (all argued to be highly correlated, directly and indirectly, with those things that comprise a manager\u27s individual utility function). Organizational performance was assessed by analyzing return on common equity and return on asset measures. Data was analyzed using discriminant analysis, within and between group analyses, and multiple regression/correlation analysis. A set of analyses was conducted for a matched pair of firms in which the treatment firm passed its first antitakeover amendment in 1983. In addition, this same set of analyses was replicated for a matched pair of firms in which the treatment firm passed its first antitakeover amendment in 1984. The results of this research fall to indicate the existence of a general main effect of antitakeover amendments on the outcome measures related to the strategic, managerial, and organizational outcomes for either the 1983 or 1984 samples of firms. These findings dispute many of the arguments, both pro and con, concerning the relative merits of antitakeover amendments. While results indicate that antitakeover amendments do not adversely affect organizations, findings also suggest that they do not benefit them either. Results do indicate, however, that the relationship between antitakeover amendments and some outcome measures, especially those related to organizational performance, may be dependent upon the level of the outcome measure in prior periods. These findings indicate that the impact of antitakeover amendments on various outcomes may be more complex than existing literature would suggest