Does Firm’s Geographic Location Affect Its Takeover Exposure?

Abstract:     
We examine the effect of a firm’s geographic location on its takeover exposure using a sample of US firms from 1990 to 2009. We show that firms located in urban areas are 35.3% more likely to receive takeover bids and 36.4% more likely to complete takeover transactions than firms located elsewhere. Our findings are robust to alternative urban location proxies and reverse causality concerns, and are persistent across various subsample periods. We further find that urban firms are more likely to become takeover targets because they are subject to a lower degree of soft information asymmetry compared to non-urban firms.

Number of Pages in PDF File: 44

Keywords: geographic location, takeover exposure, information asymmetry

JEL Classification: G14, G30, G34

working papers series