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Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences

Sandy Klasa
University of Arizona - Department of Finance

Mike Stegemoller
Texas Tech University - Rawls College of Business

Financial Management, Forthcoming

Abstract:
We study takeover sequences that contain at least five acquisitions made by an individual acquirer over a period greater than 12 months with no two acquisitions separated by more than 24 months. Acquisitions made in the context of such sequences represent more than 25% of takeover activity by U.S. public firms from 1982 to 1999. Our findings suggest takeover sequences are made in the context of time-varying changes in an acquiring firm's growth opportunity set. Specifically, our results indicate that takeover sequences begin subsequent to an expansion of this opportunity set and end when this opportunity set closes off. Our evidence does not support a proposition that a low quality acquisition is what causes a takeover sequence to end.

JEL Classifications: G31, G34

Accepted Paper Series

Date posted: October 19, 2004 ; Last revised: May 06, 2009

Suggested Citation

Klasa, Sandy and Stegemoller, Mike A., Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences. Financial Management, Forthcoming. Available at SSRN: http://ssrn.com/abstract=606081

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Contact Information

Sandy Klasa (Contact Author) University of Arizona - Department of Finance ( email ) McClelland Hall P.O. Box 210108 Tucson, AZ 85721-0108 United States 520-621-8761 (Phone)
Michael A. Stegemoller Texas Tech University - Rawls College of Business ( email ) Lubbock, TX 79409 United States 806-742-3338 (Phone)