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Is Attack the Best form of Defence? A Competing Risks Analysis of Acquisition Activity in the UK

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Author Info
Andrew P. Dickerson ()
Heather D. Gibson
Euclid Tsakalotos ()

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Abstract

The primary purpose of this paper is to investigate whether companies can use acquisition as a strategy to reduce their probability of takeover. A subsidiary issue is whether such a strategy has any impact on their subsequent probability of bankruptcy. The determinants of making an acquisition, being taken over, and bankruptcy are modelled within a competing risks framework using two large samples of UK manufacturing companies. Our results indicate that, ceteris paribus, companies which make acquisitions can significantly reduce their conditional probability of being taken over, largely through the impact that acquisition has on corporate size. In this sense, attack, through acquisition, is the best form of defence, against takeover.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/9907.pdf
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Publisher Info
Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9907.

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Date of creation: May 1999
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Handle: RePEc:ukc:ukcedp:9907

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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/

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Related research
Keywords: Takeovers; Acquisitions; Bankruptcy; Competing Risks;

Other versions of this item:

Find related papers by JEL classification:
G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  8. Narendranathan, Wiji & Stewart, Mark B, 1991. "Simple Methods for Testing for the Proportionality of Cause-Specific Hazards in Competing Risk Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(3), pages 331-40, August.
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    Other versions:
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    Other versions:
  16. Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1998. "Takeover Risk and Dividend Strategy: A Study of UK Firms," Journal of Industrial Economics, Blackwell Publishing, vol. 46(3), pages 281-300, September. [Downloadable!] (restricted)
  17. Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 1997. "Deterring Takeover: Evidence from a Large Panel of UK Firms," Studies in Economics 9707, Department of Economics, University of Kent.
  18. Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1997. "The Impact of Acquisitions on Company Performance: Evidence from a Large Panel of UK Firms," Oxford Economic Papers, Oxford University Press, vol. 49(3), pages 344-61, July. [Downloadable!] (restricted)
  19. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-38, February.
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    Other versions:
  22. Shleifer, Andrei & Vishny, Robert W, 1988. "Value Maximization and the Acquisition Process," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 7-20, Winter. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andy Cosh & Alan Hughes, 2008. "Takeovers after "Takeovers"," ESRC Centre for Business Research - Working Papers wp363, ESRC Centre for Business Research. [Downloadable!]
  2. Eleni Angelopoulou & Heather D. Gibson, 2007. "The Balance Sheet Channel of Monetary Policy Transmission: Evidence from the UK," Working Papers 53, Bank of Greece. [Downloadable!]
  3. 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. [Downloadable!]
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