Takeovers at gun-point: does hostility pay-off in the long-run?
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2021-06-28
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en
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Abstract
Corporate restructures may take various forms, motives or attitudes. Takeover attitudes are generally characterised as either friendly or hostile. The latter definition has been studied in terms of short-term abnormal returns by a variety of academics. Where the literature on short-term results in the majority of cases are consistent, do long-run performances of hostile takeovers show different outcomes. This study utilises an event study for 63 hostile takeovers, which are defined as mergers and acquisitions, and defines long-run performance as cumulative- and buy-and-hold abnormal returns after a three-year period. The study opts to explain the effect of payment methods, industry- and country-specification, and the effect of hostility in different time periods. The results show negative abnormal returns in general for both dependent variables, but positive returns after a one-year period, therefore contradicting the hypothesized outcomes on short-term and long-run performance. However, mixed payment takeovers and same-industry hostile deals show positive abnormal returns in the long-run, as well do 1997-2007 takeovers compared to 2008-2017 transactions. Therefore, does hostility pay-off? In general no, but in certain situations it does.
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Faculteit der Managementwetenschappen