Corporate Inefficiency and the Risk of Takeover
The present study, using the Cox proportional hazard model, suggests a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. The effects of variables capturing cost inefficiency on the risk of takeover appear to be remarkably stable over the nearly two decades spanned by the sample, while the effect of the variables measuring the risk-size relationship indicate temporal changes. Once cost inefficiency is accounted for, the paper fails to find consistent evidence for the effects of other conventionally used performance measures, such as profitability and q, on the risk of takeover.
|Date of creation:||2000|
|Date of revision:|
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|Order Information:|| Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012|
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- Hasbrouck, Joel, 1985. "The characteristics of takeover targets and other measures," Journal of Banking & Finance, Elsevier, vol. 9(3), pages 351-362, September.
- Ronan G. Powell, 1997. "Modelling Takeover Likelihood," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 24(7&8), pages 1009-1030.
- Cudd, Mike & Duggal, Rakesh, 2000. "Industry Distributional Characteristics of Financial Ratios: An Acquisition Theory Application," The Financial Review, Eastern Finance Association, vol. 35(1), pages 105-20, February.
- Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1998. "Takeover Risk and Dividend Strategy: A Study of UK Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 281-300, September.
- John G. Matsusaka, 1993.
"Takeover Motives during the Conglomerate Merger Wave,"
RAND Journal of Economics,
The RAND Corporation, vol. 24(3), pages 357-379, Autumn.
- Matsusaka, J.C., 1991. "Takeover Motives During the Conglomerate Merger Wave," Papers 91-33, Southern California - School of Business Administration.
- Randall Morck & Andrei Shleifer & Robert W. Vishny, 1988. "Characteristics of Targets of Hostile and Friendly Takeovers," NBER Chapters, in: Corporate Takeovers: Causes and Consequences, pages 101-136 National Bureau of Economic Research, Inc.
- Ambrose, Brent W. & Megginson, William L., 1992. "The Role of Asset Structure, Ownership Structure, and Takeover Defenses in Determining Acquisition Likelihood," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(04), pages 575-589, December.
- Palepu, Krishna G., 1986. "Predicting takeover targets : A methodological and empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 8(1), pages 3-35, March.
- Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in the Transition Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1153-1191.
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