Anti-takeover provisions facilitate empire building

Three of the most prominent anti-takeover provisions (ATPs) are

• staggered boards, where only a third of directors are up for election each year;
  
• poison pills that allow existing shareholders to acquire large amounts of stock at a substantial discount when a hostile bidder acquires a large block of shares;
  
• golden parachutes, or extraordinary severance packages for executives terminated or demoted after a change of control.

Colleague Ron Masulis finds that acquisition announcements by firms with more ATPs (most significant are staggered boards) tend to generate lower returns. He concludes that managers at firms with more ATP's are more likely to engage in opportunistic behavior such as empire building.