Managerial Entrenchment and Antitakeover Provisions in Japan

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 self-protection 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.