Deterring Takeover: Evidence from a Large Panel of UK Firms
AbstractWe investigate the relationship between a company's dividend strategy and its risk of takeover. Our results from a large panel of UK quoted companies suggest that higher dividend payments are associated with a significantly lower conditional probability (hazard) of takeover. Moreover, firms which wish to avoid takeover would be better to distribute the marginal £1 of earnings in dividends rather than investing it in the company. We consider two explanations for these findings. We suggest that the presence of an active market for corporate control could encourage firms to raise dividends to maintain shareholder loyalty.
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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9707.
Date of creation: Jun 1997
Date of revision:
Publication status: Published in Journal of Industrial Economics, 1998, XLV1, 3, pp.281-300
Contact details of provider:
Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
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- Dimara, Efthalia & Tzelepis, Dimitris & Skuras, Dimitris, 2000. "Regional Development Incentives And Firm Survival: A Case Study Of The Greek Food Sector," ERSA conference papers ersa00p209, European Regional Science Association.
- Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 1998.
"Takeover Risk and the Market for Corporate Control: The Experience of British Firms in the 1970s and 1980s,"
Studies in Economics
9803, Department of Economics, University of Kent.
- Dickerson, Andrew P. & Gibson, Heather D. & Tsakalotos, Euclid, 2002. "Takeover risk and the market for corporate control: the experience of British firms in the 1970s and 1980s," International Journal of Industrial Organization, Elsevier, vol. 20(8), pages 1167-1195, October.
- Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 1999.
"Is Attack the Best form of Defence? A Competing Risks Analysis of Acquisition Activity in the UK,"
Studies in Economics
9907, Department of Economics, University of Kent.
- Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 2003. "Is attack the best form of defence? A competing risks analysis of acquisition activity in the UK," Cambridge Journal of Economics, Oxford University Press, vol. 27(3), pages 337-357, May.
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