CORPORATE GOVERNANCE WITHIN THE CONTEXT OF ANTITAKEOVER PROVISIONS

This paper advances understanding of corporate governance relationship s with a longitudinal study of multiple antitakeover options. Prior an alyses have been primarily cross-sectional, focused exclusively on a s ingle provision ignoring provisions which require subsequent stockhold er approval. The current study uses agency theory, and broadens this p erspective by examining the differential impact of institutional inves tors' stockholding, managerial stock ownership, and corporate board ch aracteristics on the rate of adoption of six provisions, including pro visions which do and do not require stockholder approval. Results of h azard analyses of the rate of amendment adoption of 185 firms between 1984 and 1988 indicate that the impact of governance variables on anti takeover provisions differ depending on whether these actions require stockholder approval or not. The pattern of differences indicates that institutional investors use their voting power when they are given an opportunity to vote and that substitution between direct shareholder control and managerial stock ownership exists.