Global Antitakeover Devices

This Article explores a “hidden” mechanism that insulates management from hostile takeovers and activist intervention: the global antitakeover device (“GAD”). A GAD is based on the ability of public firms to “mix and match” between different forms of regulation by cross-listing on multiple stock exchanges or incorporating in foreign jurisdictions. This action subjects any hostile engagement with these firms to multiple jurisdictions’ regulatory frameworks and creates regulatory barriers, complexity, and uncertainty. This Article provides a comprehensive analysis of these GADs, the costs they generate to potential bidders, and the unique features they possess relative to traditional antitakeover devices

GADs are not an isolated phenomenon. Their potential economic impact is significant, as one in seven firms traded on U.S. exchanges are incorporated or cross-listed in foreign jurisdictions. Moreover, the impact of these devices could extend beyond the market for corporate control, as foreign firms could also enjoy additional insulation from activist hedge funds. The Article also locates GADs in the wider theoretical literature on cross-listing and offers policy recommendations for overcoming GADs’ insulation effects.