WHO OPTS OUT OF STATE ANTITAKEOVER PROTECTION - THE CASE OF PENNSYLVANIA SB-1310

In 1990, Pennsylvania enacted Senate Bill 1310, containing five provisions designed to make takeovers prohibitively expensive but allowing firms to opt out of some or all of the law's provisions, We find that firms that opted out of SE 1310 had lower insider control of voting rights and were less likely to have a poison pill in place prior to the law's enactment, even after controlling for firm size and the monitoring activities of blockholders and outside directors. In addition, we find that opt-out firms spent less on R&D than non-opt-out firms, Our results suggest that some boards value takeover defenses (whether firm or state-level) whereas others prefer to be subject to an active market for corporate control.