ABSTRACT
This chapter examines the wealth effects associated with the announcement of anti-takeover amendments to articles of association by companies listed on the Australian Stock Exchange. “Active monitoring” behavior by institutional investors implies that such investors vote in accordance with their economic interests and, as such, vote with management only if there are potential benefits to shareholders in the proposal. The need for shareholders to monitor management arises from informational asymmetries between the owners and the managers of a firm. G. A. Jarrell and A. B. Poulsen examine the possibility that institutional ownership may play an important role in determining the wealth effects associated with the implementation of antitakeover charter amendments (ATCAs). Using logit analysis, their results indicate that those ATCAs which are associated with the most favorable share price effect are implemented by firms with a significantly higher concentration of share ownership by institutional investors.
