Is Attack the Best form of Defence? A Competing Risks Analysis of Acquisition Activity in the UK
AbstractThe 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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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9907.
Date of creation: May 1999
Date of revision:
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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
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Other versions of this item:
- 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.
- 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; Optimal Timing Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-03-13 (All new papers)
- NEP-CFN-2000-03-13 (Corporate Finance)
- NEP-IND-2000-03-13 (Industrial Organization)
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