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Hostility in Takeovers: In the Eyes of the Beholder?
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In this paper, the authors examine whether hostile takeovers can be distinguished from friendly takeovers, empirically, based on accounting and stock performance data, and show that most deals described as hostile in the press are not distinguishable from friendly deals in economic terms, and negotiations are publicized earlier in hostile transactions.Abstract:
This paper examines whether hostile takeovers can be distinguished from friendly takeovers, empirically, based on accounting and stock performance data. Much has been made of this distinction in both the popular and the academic literature, where gains from hostile takeovers are typically attributed to the value of replacing incumbent managers and the gains from friendly takeovers are typically attributed to strategic synergies. Alternatively, hostility could reflect just a perceptual distinction arising from different patterns of public disclosure, where negotiated outcomes are the rule and transactions tend to be characterized as friendly when bargaining remains undisclosed throughout, and hostile when the public becomes aware of the negotiation before its resolution. Empirical tests show that most deals described as hostile in the press are not distinguishable from friendly deals in economic terms, and that negotiations are publicized earlier in hostile transactions.read more
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Firm size and the gains from acquisitions
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Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave
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Does Investor Misvaluation Drive the Takeover Market
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Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s
Bengt Holmstrom,Steven N. Kaplan +1 more
TL;DR: Corporate governance in the United States changed dramatically throughout the 1980s and 1990s as discussed by the authors, with a large wave of merger, takeover and restructuring activity, distinguished by its use of leverage and hostility.
References
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A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity
TL;DR: In this article, a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic is presented, which does not depend on a formal model of the structure of the heteroSkewedness.
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The Hubris Hypothesis of Corporate Takeovers
TL;DR: The hubris hypothesis is advanced as an explanation of corporate takeovers by Jensen and Ruback as mentioned in this paper, who argued that the evidence supports the hubris hypotheses as much as it supports other explanations such as taxes, synergy, and inefficient target management.
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The Determinants and Implications of Corporate Cash Holdings
TL;DR: The authors examined the determinants and implications of holdings of cash and marketable securities by publicly traded U.S. firms in the 1971-1994 period and found that firms with strong growth opportunities and riskier cash flows hold relatively high ratios of cash to total assets.
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Mergers and the Market for Corporate Control
TL;DR: In this article, it was suggested that a failing company defense may be unavailable when a large corporation is making the acquisition, or when there is any chance of absorption by a non-competing firm, and when the acquired company has not "failed" enough.
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Corporate Cash Reserves and Acquisitions
TL;DR: In this paper, a model of cash management is developed and used to identify a sample of cash-rich firms, and the acquisition behavior of these firms is examined for evidence of free cash flow-related behavior.