This study examines the effect of management responses to takeovers on the value of the targetfirm. Three categories of takeover responses are identified: auction-inducing resistance, competitionreducing resistance, and support. Auction-inducing resistance is shown to increase competition for control of the target firm. This increased competition leads to increased gains to the target firm during the takeover battle relative to gains obtained when the initial takeover offer is supported. Competition-reducing resistance is shown to have the opposite effect.
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