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Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences

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  • Sandy Klasa
  • Mike Stegemoller

Abstract

We study takeover sequences that contain at least five acquisitions made over a period greater than 12 months, with no two acquisitions separated by more than 24 months. Acquisitions made within such sequences represent more than a quarter of aggregate takeover activity by U.S. public firms from 1982-1999. Our fi ndings are consistent with a proposition that takeover sequences occur in the context of time-varying changes in an acquirer's growth opportunity set. Takeover sequences begin (end) subsequent to an expansion (contraction) of this opportunity set. Copyright (c) 2007 Financial Management Association International.

Suggested Citation

  • Sandy Klasa & Mike Stegemoller, 2007. "Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences," Financial Management, Financial Management Association International, vol. 36(2), pages 1-25, July.
  • Handle: RePEc:bla:finmgt:v:36:y:2007:i:2:p:1-25
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    Cited by:

    1. Jaffe, Jeffrey & Pedersen, David & Voetmann, Torben, 2013. "Skill differences in corporate acquisitions," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 166-181.
    2. repec:kap:rqfnac:v:50:y:2018:i:3:d:10.1007_s11156-017-0645-x is not listed on IDEAS
    3. Al Rahahleh, Naseem & Wei, Peihwang Philip, 2012. "The performance of frequent acquirers: Evidence from emerging markets," Global Finance Journal, Elsevier, vol. 23(1), pages 16-33.
    4. repec:bla:acctfi:v:57:y:2017:i::p:185-210 is not listed on IDEAS
    5. Deshpande, Shreesh & Svetina, Marko & Zhu, PengCheng, 2012. "Analyst coverage of acquiring firms and value creation in cross-border acquisitions," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 212-229.
    6. Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2009. "Learning, hubris and corporate serial acquisitions," Journal of Corporate Finance, Elsevier, vol. 15(5), pages 543-561, December.
    7. Matthew T. Billett & Yiming Qian, 2008. "Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers," Management Science, INFORMS, vol. 54(6), pages 1037-1051, June.
    8. Harford, Jarrad & Klasa, Sandy & Walcott, Nathan, 2009. "Do firms have leverage targets? Evidence from acquisitions," Journal of Financial Economics, Elsevier, vol. 93(1), pages 1-14, July.
    9. Sudip Ghosh & Christine Harrington & Walter Smith, 2011. "Do windfall non-debt tax shields from acquisitions affect corporate debt issues?," Managerial Finance, Emerald Group Publishing, vol. 37(6), pages 537-552, May.
    10. Husayn Shahrur & Anand Venkateswaran, 2009. "Industry Prospects And Acquirer Returns In Diversifying Takeovers," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(1), pages 23-51.
    11. Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2011. "Serial acquirer bidding: An empirical test of the learning hypothesis," Journal of Corporate Finance, Elsevier, vol. 17(1), pages 18-32, February.

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