Working Papers,
Copenhagen Business School, Department of Finance

Abstract: The article studies how takeover defenses influence managerial

incentives with respect to long term investments, excess liquidity and the amount of

debt relative to equity. The article conducts a cross-sectional regression based on a

sample of Danish listed firms, dealing explicitly with the problem of causation

between the variables. Takeover defenses adopted by Danish firms mainly consist

of shares with dual class voting rights often in combination with foundation

ownership. The article finds that protected firms have significantly less debt to

equity. However, protected firms are not significantly more oriented towards the

long-term and do not have significantly more excess liquidity.

Keywords: Takeover Defenses; Company Law; Corporate Control; Corporate Governance; Simultaneous Equation Estimation

JEL-codes: C31; G32; G34; K22

37 pages, July 1, 2002

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