The Role of Asset Structure, Ownership Structure, and Takeover Defenses in Determining Acquisition Likelihood

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Abstract

This paper extends the Palepu (1986) acquisition likelihood model by incorporating measures of insider and institutional shareholdings, by examining the deterrent effect of various takeover defenses, and by considering the effect of varying proportions of fixed (tangible) assets in a firm's total asset structure. We find that the probability of receiving a takeover bid is positively related to tangible assets, and negatively related to firm size and to the net change in institutional holdings. Blank-check preferred stock authorizations are the only common takeover defense significantly (negatively) correlated with acquisition likelihood.

Original languageEnglish (US)
Pages (from-to)575-589
Number of pages15
JournalJournal of Financial and Quantitative Analysis
Volume27
Issue number4
DOIs
StatePublished - Dec 1992

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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