New publication for M. Frattaroli in Journal of Financial Economics

© 2019 EPFL

© 2019 EPFL

A new research paper by Marc Frattaroli has been accepted for publication in the Journal of Financial Economics. Frattaroli is a PhD student at the chair of Professor Fahlenbrach.

The paper is titled “Does protectionist anti-takeover legislation lead to managerial entrenchment?” and investigates whether companies shielded from foreign acquisition attempts implement inefficient policies and become less profitable. For this purpose, it studies the Alstom Decree, a protectionist law introduced in France in 2014. The author does not find any evidence that firms protected from cross-border takeovers become less efficient.


I study a protectionist anti-takeover law introduced in 2014 that covers a subset of all firms in the economy. The law decreased affected firms' likelihood of becoming the target of a merger or acquisition and had a negative impact on shareholder value. There is no evidence that management of those firms subsequently altered firm policies in its interest. Investment, employment, wages, profitability, and capital structure remain unchanged. The share of annual CEO compensation consisting of equity instruments increased by 8.4 percentage points, suggesting that boards reacted to the loss in monitoring by the takeover market by increasing the pay-for-performance sensitivity.

Author: Carole Bonardi