Hostile takeovers and the correction of managerial failure☆
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2019, Journal of Corporate FinanceCitation Excerpt :As tender offers are often hostile in attitude (as the bidding firm bypasses the board and directly addresses an offer to the target shareholders) and premiums are typically higher, target returns in tender offers are generally much larger than those in friendly deals. This difference is even more striking for hostile deals in which the target board rejects the offer, because the market expects that opposition to a bid will trigger upward bid revisions (see Servaes (1991) for the US; Franks and Mayer (1996) for the UK; Martynova and Renneboog (2011) for Europe). Although bidder returns are expected to reflect the opposite pattern (bidder shareholders may fear overbidding in hostile transactions that may allot more than the expected synergy value to the target shareholders and hence drives the acquirer's share price down), some argue that bidder returns and combined returns should also be positive and larger in hostile deals.
Decoupling management inefficiency: Myopia, hyperopia and takeover likelihood
2019, International Review of Financial AnalysisCitation Excerpt :Consistent with the results from the univariate analysis, the results show that takeover likelihood declines with AAR and increases with ROCE after controlling for other determinants of takeover likelihood. These results are also robust to bid characteristics (untabulated), mirror the findings of prior studies (Danbolt et al., 2016; Palepu, 1986) and are consistent with other studies exploring the management inefficiency hypothesis (e.g., Franks & Mayer, 1996; Agrawal & Jaffe, 2003. These results are inconclusive, as they neither support nor refute the management inefficiency hypothesis.
CSR inequality, managerial myopia and hostile takeover threats
2024, Managerial FinanceCross border mergers and acquisitions: A comparative study between India and the USA
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This paper is part of an ESRC funded project, number W102251003, on ‘Capital Markets, Corporate Governance, and the Market for Corporate Control’. We are grateful to Nick Carrick, Luis Correia da Silva, and Marc Goergen for valuable research assistance. We wish to thank John Chown for financial assistance on this project and for helpful discussions.
The paper has been presented at the 1993 Annual Meeting of the American Finance Association in Anaheim, at the Annual Meeting of the French Finance Association in Paris, at the Annual Meeting of the European Finance Association in Athens, at a conference on European Restructuring at INSEAD and at seminars in Essex, Keele, Oxford, Paris, and Warwick.
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We are particularly grateful to discussants Patrick Bolton, Stuart Gilson, Kristian Rydqvist, and Paul Seabright for valuable suggestions. We are also grateful for comments from Swami Bhaskaran, Michael Brennen, Michel Habib, David Hirshleifer, Ernst Maug, Narayan Naik, Kjell Nyborg, and Walter Torous. We also wish to thank Richard Ruback (the editor) and John Pound (the referee) for many helpful comments in the revision of the manuscript.