Takeovers, institutional investment and the persistence of profits
AbstractThis paper studies the impact of takeovers on the profitability of the participating companies and the influence of institutional investors on this process. It involves an original approach to assessing the profitability impact by modelling the dynamics of corporate profitability. It is shown that the standard counterfactual assumptions made in most merger effect studies are biased against finidng profit-enhancing merger effects where acquiring firms display above average profitabiltiy prior to the merger. On the other hand, acquisition is shown to reinforce the tendency amongst companies for their profitability to move towards industry norms over time.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39061.
Date of creation: Mar 1996
Date of revision:
company takeover; insitutional investors; company profitability;
Find related papers by JEL classification:
- L0 - Industrial Organization - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G3 - Financial Economics - - Corporate Finance and Governance
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