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Having more potential raiders weakens the takeover threat

Author

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  • Toolsema, Linda A.

    (Groningen University)

Abstract

We argue in this paper that a more active market for corporate control may weaken the takeover threat. We show that an increase in the number of potential raiders tends to decrease the probability of a takeover. This in turn weakens managerial incentives. The lower managerial effort level that results in equilibrium negatively affects the ex ante value of the firm.

Suggested Citation

  • Toolsema, Linda A., 2003. "Having more potential raiders weakens the takeover threat," CCSO Working Papers 200304, University of Groningen, CCSO Centre for Economic Research.
    • Handle: RePEc:gro:rugccs:200304
    as

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    File URL: http://irs.ub.rug.nl/ppn/249568691
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