Statistics

Mathematical analysis

Nature versus nurture

Economics

Discontinuity (linguistics)

Physics

Accounting

Finance

Business

Equity (law)

Mathematics

Corporate governance

Regression discontinuity design

Biology

Political science

Monetary economics

Quantum mechanics

Enterprise value

Causality (physics)

Industrial organization

Shareholder

Genetics

Journal of Financial and Quantitative Analysis

We study the effect of antitakeover provisions (ATPs) on innovation. To establish causality, we use a regression discontinuity approach that relies on locally exogenous variation generated by shareholder proposal votes. We find a positive, causal effect of ATPs on innovation. This positive effect is more pronounced in firms that are subject to a larger degree of information asymmetry and operate in more competitive product markets. The evidence suggests that ATPs help nurture innovation by insulating managers from short-term pressures arising from equity markets. Finally, the number of ATPs contributes positively to firm value for firms involved in intensive innovation activities.

Do Antitakeover Provisions Spur Corporate Innovation? A Regression Discontinuity Analysis