IDEAS home Printed from https://ideas.repec.org/a/oup/revfin/v19y2015i6p2277-2315..html
   My bibliography  Save this article

Corporate Aging and Takeover Risk

Author

Listed:
  • Claudio Loderer
  • URS Waelchli

Abstract

Although growth opportunities fade and profitability declines as firms mature, older firms are no more likely to be acquired than young firms are. This article documents and explains that phenomenon. We argue that, because mature organizations are rationally less flexible, they are more costly to integrate and therefore comparatively unattractive acquisition candidates. The evidence supports this explanation of the negative age dependence of takeover hazard. The evidence also shows that negative exogenous shocks to merger benefits further reduce the takeover hazard of mature firms. We test many alternative explanations and find no evidence that they can explain the hazard decline.

Suggested Citation

  • Claudio Loderer & URS Waelchli, 2015. "Corporate Aging and Takeover Risk," Review of Finance, European Finance Association, vol. 19(6), pages 2277-2315.
    • Handle: RePEc:oup:revfin:v:19:y:2015:i:6:p:2277-2315.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rof/rfu048
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    2. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
    3. Kole, Stacey R & Lehn, Kenneth, 1997. "Deregulation, the Evolution of Corporate Governance Structure, and Survival," American Economic Review, American Economic Association, vol. 87(2), pages 421-425, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eugster, Florian & Wagner, Alexander F., 2020. "Value reporting and firm performance," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    2. Mella-Barral, P. & Sabourian, H., 2023. "Repeated Innovations and Excessive Spin-Offs," Cambridge Working Papers in Economics 2347, Faculty of Economics, University of Cambridge.
    3. Mella-Barral, P. & Sabourian, H., 2023. "Repeated Innovations and Excessive Spin-Offs," Janeway Institute Working Papers 2312, Faculty of Economics, University of Cambridge.
    4. Bank, Matthias & Insam, Franz, 2021. "Corporate aging and changes in the pricing of stock characteristics," Finance Research Letters, Elsevier, vol. 42(C).
    5. Pierre Mella‐Barral & Hamid Sabourian, 2024. "Repeated innovations and excessive spin‐offs," The Financial Review, Eastern Finance Association, vol. 59(1), pages 155-179, February.
    6. Claudio Loderer & René Stulz & Urs Waelchli, 2017. "Firm Rigidities and the Decline in Growth Opportunities," Management Science, INFORMS, vol. 63(9), pages 3000-3020, September.
    7. Tunyi, Abongeh A., 2021. "Revisiting acquirer returns: Evidence from unanticipated deals," Journal of Corporate Finance, Elsevier, vol. 66(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heinrich, Ralph P., 1999. "Complementarities in Corporate Governance - A Survey of the Literature with Special Emphasis on Japan," Kiel Working Papers 947, Kiel Institute for the World Economy (IfW Kiel).
    2. Marc Berninger & Markus Klug & Dirk Schiereck, 2018. "Börsenrückzüge infolge steigender Corporate-Governance-Anforderungen – Empirische Evidenz von 13 europäischen Kapitalmärkten [Delistings due to Increased Corporate Governance Requirements – Empiric," Schmalenbach Journal of Business Research, Springer, vol. 70(4), pages 351-391, December.
    3. Ovtchinnikov, Alexei V., 2013. "Merger waves following industry deregulation," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 51-76.
    4. Börsch-Supan, Axel & Köke, Jens, 2000. "An applied econometricians' view of empirical corporate governance studies," ZEW Discussion Papers 00-17, ZEW - Leibniz Centre for European Economic Research.
    5. Udayasankar, Krishna & Das, Shobha & Krishnamurti, Chandrasekhar, 2008. "When is Two Really Company? The Effects of Competition and Regulation on Corporate Governance," Working Paper Series 19122, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. Vasso Ioannidou & Steven Ongena & José-Luis Peydró, 2015. "Monetary Policy, Risk-Taking, and Pricing: Evidence from a Quasi-Natural Experiment," Review of Finance, European Finance Association, vol. 19(1), pages 95-144.
    7. Leuz, Christian & Triantis, Alexander & Yue Wang, Tracy, 2008. "Why do firms go dark? Causes and economic consequences of voluntary SEC deregistrations," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 181-208, August.
    8. Kishimoto, Jo & Goto, Mika & Inoue, Kotaro, 2017. "Do acquisitions by electric utility companies create value? Evidence from deregulated markets," Energy Policy, Elsevier, vol. 105(C), pages 212-224.
    9. Banyi, Monica & Caplan, Dennis, 2016. "Do firms follow GAAP when they record share repurchases?," Advances in accounting, Elsevier, vol. 34(C), pages 41-54.
    10. Steve Thompson, 1999. "Increasingly Marginal Utilities: Diversification and Free Cash Flow in Newly Privatized UK Utilities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(1), pages 25-42, August.
    11. Guang‐Zheng Chen & Edmund C. Keung, 2018. "Corporate diversification, institutional investors and internal control quality," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 751-786, September.
    12. Thompson, Anne M., 2022. "Political connections and the SEC confidential treatment process," Journal of Accounting and Economics, Elsevier, vol. 74(1).
    13. Dalida Kadyrzhanova, 2005. "Predatory Governance," Computing in Economics and Finance 2005 421, Society for Computational Economics.
    14. Steijvers, Tensie & Niskanen, Mervi, 2014. "Tax aggressiveness in private family firms: An agency perspective," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 347-357.
    15. Reiff, Annika & Tykvová, Tereza, 2021. "IPO withdrawals: Are corporate governance and VC characteristics the guiding light in the rough sea of volatile markets?," Journal of Corporate Finance, Elsevier, vol. 67(C).
    16. Bliss, Barbara A. & Cheng, Yingmei & Denis, David J., 2015. "Corporate payout, cash retention, and the supply of credit: Evidence from the 2008–2009 credit crisis," Journal of Financial Economics, Elsevier, vol. 115(3), pages 521-540.
    17. Fang, Tian Jin & Han, Jianlei & He, Jing & Shi, Jing, 2021. "Property rights protection and mergers and acquisitions," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    18. Tinaikar, Surjit & Xu, Bo, 2023. "Does competition exacerbate investment inefficiencies? Evidence from Japanese firms," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 35-53.
    19. repec:vuw:vuwscr:19122 is not listed on IDEAS
    20. Chang, Ya-Kai & Chou, Robin K. & Huang, Tai-Hsin, 2014. "Corporate governance and the dynamics of capital structure: New evidence," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 374-385.
    21. Sheikh, Shahbaz, 2022. "CEO power and the likelihood of paying dividends: Effect of profitability and cash flow volatility," Journal of Corporate Finance, Elsevier, vol. 73(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revfin:v:19:y:2015:i:6:p:2277-2315.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eufaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.