The Antitakeover Provisions In The Articles Of Association And The Firm Value

The Antitakeover Provisions(ATPs) plays an important role in the research of corporate governance.In recent years,hostile takeover events have occurred in Chinese capital market frequently.In order to face with the threat of hostile takeover,some enterprises have set up antitakeover provisions in the company's articles of association to increase the difficulties of acquiring which can guard against the risks.In the long run,there are no clear conclusions that whether the antitakeover provisions can affect firm value and how it will work.As a typical representative of emerging market countries,China's laws and regulations are not perfect,and the market for control rights is underdeveloped.Additionally,the listed companies are mainly controlled by major shareholders.Based on this,studying the causal relationship between antitakeover provisions and firm value may get different results from the developed countries.Besides,this paper studies the relationship between antitakeover provisions and the first type of agency problems and the more prominent second-type agency problems and R&D investment for Chinese firms.This paper selects the data of listed company with Shenzhen and Shanghai A shares around 2007 to 2016,and obtain 20977 research samples by using manually collect data on antitakeover provisions.Using the propensity score matching-difference in difference(PSM-DID)approach,this paper examine the causal effect of ATPs and firm value.The results show that ATPs have a significant negative effect on the firm value,ATPs also can significantly increase the second agency costs.Its main role is the protection of the company's actual controllers,which is not conducive to protecting the interests of minority shareholders.The effect of ATPs on the first agency costs is negative but not significant,and it's no significant effect on R&D investment.Therefore,under the background of China's dominant shareholder holding system,setting up antitakeover provisions will safeguard the interests of controlling shareholders,and makes actual controllers more motivated to raise the level of tunneling.However,there are no significant value effect.The specific influence mechanism of the antitakeover provisions on the firm value is increasing the agency cost,which ultimately impairs the company's value.This study also indicates that listed companies with the lower shareholding ratio of the first shareholder have more motivated to set up antitakeover provisions to resist hostile takeovers.The conclusions of this paper provides reliable empirical evidence that can make listed companies to set up antitakeover provisions scientifically and reasonably.It is also important for regulators to strengthen the supervision of listed companies and improve relevant laws and regulations.