Abstract

http://ssrn.com/abstract=893046
 


 



Is Hostility in the Merger and Acquisition Market Wasteful? Empirical Evidence of the Economic Costs of Hostility


Sema Dube


Yeditepe University

John L. Glascock


University of Connecticut; European Business School

Mark Klock


Penn State Law

2007

Journal of Business and Securities Law, Vol. 7, Nos. 1-2, pp 9-49

Abstract:     
The question as to whether hostility is economically wasteful has been subject to intense debate for decades in the literature of law, economics, and finance. Typically the debate is focused in the issue of managerial entrenchment. Commentators frequently adopt an unstated presumption that hostility is wasteful per se. We argue that it is important to examine empirical data before accepting this premise. We investigate long-term, post-acquisition measures of corporate operating performance of hostile acquisitions relative to non-hostile acquisitions. Our results suggest that hostility does not affect operating performance, and from this we infer that there are no economic costs associated with hostility. The findings are robust with respect to a variety of methodologies and control variables.

Keywords: hostility, acquisition, cash flow, performance

JEL Classification: G3, K2

working papers series


Not Available For Download

Date posted: March 23, 2006 ; Last revised: November 24, 2008

Suggested Citation

Dube, Sema and Glascock, John L. and Klock, Mark, Is Hostility in the Merger and Acquisition Market Wasteful? Empirical Evidence of the Economic Costs of Hostility (2007). Journal of Business and Securities Law, Vol. 7, Nos. 1-2, pp 9-49. Available at SSRN: http://ssrn.com/abstract=893046

Contact Information

Sema Dube
Yeditepe University ( email )
81120 Kayisdagi, Istanbul
Turkey
John L. Glascock
University of Connecticut ( email )
368 Fairfield Road
Storrs, CT 06269-2041
United States
European Business School ( email )
Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany
Mark S. Klock (Contact Author)
Penn State Law ( email )
150 South College Street
Carlisle, PA 17013
United States
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