Excessive Defense of Antitakeover Provisions and Enterprise Value Based on PSM-DID Quasi-Natural Experimental Method

Abstract

Under the background of frequent hostile takeover events in China and the autonomy of the articles of association, the articles of association of listed companies even set up antitakeover provisions with an excessive defense that unreasonably restricts the rights of shareholders. Based on the role orientation of innovative supervision, the Small and Medium-sized Investors Service Center (hereinafter referred to as “Investment and Service Center”) proposes to modify the relevant noncompliance provisions in the form of a shareholder recommendation letter. As the basic requirements of the articles of association and the relevant laws in corporate governance are increasingly inconsistent, the legal review of the articles of association is particularly important. This article determines the identification standard of excessive defense of antitakeover provisions by manually collecting the shareholder suggestion letter of the investment service center, the announcement on amendment of association articles of listed companies, and relevant laws and regulations. On this basis, the PSM-DID quasi-natural experimental method is used to empirically test the impact of excessive defense of antitakeover provisions on enterprise value. The study finds that the excessive defense of antitakeover provisions significantly inhibited the enterprise value. In this article, taking a-share listed companies in Shanghai and Shenzhen stock markets in 2007–2018 as an example, with the construction of antiacquisition clause excessive defense index (ATP end), relying on the “quasi-natural experiment” method of PSM-DID, we discuss the impact of excessive defense antiacquisition clause on the value of the enterprise and its impact path analysis. Further study found that its restriction mechanism was reflected in the significant increase of the first type of agency cost and the second type of agency cost. At the same time, the correlation between management compensation and performance and the correlation between management and professional performance are further reduced. Excessive defense against antiacquisition terms can reduce the corporate value, and the impact path of this effect is achieved by increasing type 1 agent costs and type 2 agent costs. It shows that the controlling shareholders are more likely to collude with the management, which aggravates the agency problem. The research conclusion of this article provides legal and economic empirical evidence for listed companies to reasonably set up antitakeover provisions and is also of great significance to innovative regulatory methods such as investment service centers. Excessive defense against antitakeover terms will enhance the dual-ditch effect and ultimately damage corporate value.