Abstract
This paper evaluates the effect of shareholder passiveness on the market for corporate control. We find that firms with more passive shareholders (lower ownership per non-institutional shareholder) are less likely to be takeover targets, less likely to be acquired and command higher premiums. As the takeover threat subsides the passiveness of shareholder base decreases, which supports the idea that a passive shareholder base is a substitute for other takeover defenses. JEL Codes: G34, G32
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