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| Author: | Dickerson, A. P. Gibson, H. D. Tsakalotos, E. |
| Title: | Takeover risk and the market for corporate control: the experience of British firms in the 1970s and 1980s |
| Journal: | International Journal of Industrial Organization
2002 : OCT, VOL. 20:8, p. 1167-1196 |
| Index terms: | MERGERS COMPANY CONTROL UNITED KINGDOM COMPANIES |
| Language: | eng |
| Abstract: | This paper investigates the determinants of takeovers in a large sample of UK quoted companies. The authors focus on the channels through which the market for corporate control monitors company performance and discretionary managerial behaviour. The authors' results are consistent with the view that the market for corporate control disciplines poorly performing companies, and suggest that this effect is quantitatively important: a one standard deviation increase in profitability is associated with a fal in the conditional probability of takeover of 25%. However, the authors find no evidence that firms without apparent profitable investment opportunities are more likely to be taken over if managers increase investment or reduce dividends, contrary to the predictions of the free- cash-flow theory of takeovers. |
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