Management entrenchment is a hypothesis for anti-takeover in corporate business. This idea emerged in the 1980s when several actions to hostile takeover companies occurred, and several companies started planning on how to protect themselves from being bought through such a takeover.

Management entrenchment in Corporate Governance

Management entrenchment and corporate governance

Corporate governance

Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...

go hand in hand, where according to corporate governance thinking, is how the management entrenchment will take place.

Nowadays, there are several articles and essays on how to accomplish a proper entrenched management exercise without hurting shareholders, yet not abuse them–for example–when a board of directives is given the power to take corporate decisions in certain matters, where the corporation will be protected against hostile takeovers. Nonetheless, this form of corporate governance may cause distinct reaction on shares prices, which is why entrenchment management is not an easy concept to accomplish. Along with corporate governance, entrenchment management requires a lot of research and good management from the corporates market.