Control Contests, Special Dividends and Defensive Debt
نویسندگان
چکیده
I examine the role of debt-financed special payments to shareholders in defending incumbent managements during proxy contests. This role is based on shareholder preference for dividends and the consequent linkage between dividends and managerial security. The model is used to explain why the seemingly contradictory phenomena of (i) wealth losses to shareholders and (ii) lack of any substantial increase in managerial ownership of the firm, could accompany a successful debt-financed defense against a takeover. JEL Classification Numbers : G32, G33, G34, G35.
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