The Quiet Life Goes Macro: Anti-Takeover Laws and the Rise of Market Power

Abstract

Did weakening the market for corporate control erode business dynamism? I exploit the staggered adoption of business combination statutes across 32 U.S.\ states (1985–1997) as a natural experiment. Using the estimator, I find that anti-takeover protection reduced net establishment entry by 0.83 percentage points ($p=0.021$), with effects growing over a decade. Average establishment size fell modestly ($-3.7%$, $p=0.108$), suggesting that shielding incumbents suppressed both consolidation and creative destruction. These results provide the first causal evidence linking corporate governance reforms to the secular decline in business dynamism documented by .