Corporate Takeovers: Modern Empirical Developments

Abstract:     
This survey introduces a two-volume, 1,900-page reprint collection of articles recently published by Elsevier/North-Holland journals. Volume 1 begins with a comprehensive overview of the empirical evidence, followed by introductions to the econometrics of event studies and various techniques for dealing with corporate self-selection issues. It then delves into classic issues such as the nature of aggregate merger activity (merger waves), market valuation effects of merger announcements (the stock price performance of bidder and target firms), and the nature of the sources of merger gains in the context of industrial rganization (much of it involving estimating the effects of mergers on industry competitors). The volume ends with a review of restructuring transactions other than takeovers, such as divestitures, spinoffs, leveraged buyouts and other highly leveraged transactions.

Volume 2 presents a series of specific deal-related topics - and provides reviews of both theory and associated empirical evidence. It begins with surveys of principles for optimal bidding in specific auction settings, followed by a review of actual takeover premiums and their determinants. It then showcases recent empirical contributions on topics such as toehold bidding and winner's curse (does overbidding exist?), bidding for distressed targets (do bankruptcy auctions cause fire-sales?), effects of deal protection devices (do termination agreements and poison pills affect takeover premiums?), large shareholder voting on takeover outcomes (does institutional activism matter?), deal financing issues (does it matter how the bidder finances any cash payment for the target), managerial compensation effects of takeovers (what's in it for the CEO), governance spillovers from cross-border mergers (are there any?) and, finally, the returns to merger arbitrage activity (market efficiency and limits to arbitrage).

Number of Pages in PDF File: 49

Keywords: Takeovers, Restructurings, Bidding Strategies, Offer Premiums, Takeover Wealth Effects, Merger Waves, Targets in Bankruptcy, Merger Arbitrage

JEL Classification: G30, G31, G32, G33, G34

Accepted Paper Series