Managerial Entrenchment and Antitakeover Provisions in Japan

Abstract

We analyze the characteristics of the firms that introduce antitakeover

provisions using a Japanese firm-level dataset. We find that

the likelihood of the adoption of antitakeover provisions is correlated

positively with firm age and the proportion of cross-shareholding

and negatively with the share of managerial ownership. The adoption

of antitakeover measures is suggested to be motivated by selfprotection

on the part of managers and is influenced by the conflicts

of interest between managers and shareholders. We also find

that the operating performance or the stock market valuation does

not affect the likelihood of the adoption of antitakeover provisions.