Target Management Involved Buyouts: Impact on Takeover Competition, Litigation Risk and Shareholder Returns

60 Pages Posted: 29 Mar 2010 Last revised: 25 Mar 2016

See all articles by Sridhar Gogineni

Sridhar Gogineni

The University of Tampa - John H. Sykes College of Business

John Puthenpurackal

University of Nevada, Las Vegas - Department of Finance

Date Written: May 15, 2004

Abstract

We examine the impact of target management involvement as bidders in a sample of completed going-private buyouts. Announcement period and long run target shareholder returns do not appear to be lower in management involved deals. We attempt to identify disciplining mechanisms in the takeover process that can explain this result. We find that target shareholder lawsuits are more likely when management is involved, and litigation risk appears to positively impact target returns. We also study a sample of withdrawn buyout deals and find that a significant number of management bids are unsuccessful, further suggesting that safeguards exist in management involved deals.

Keywords: going private, management involvement, litigation risk

JEL Classification: G34

Suggested Citation

Gogineni, Sridhar and Puthenpurackal, John, Target Management Involved Buyouts: Impact on Takeover Competition, Litigation Risk and Shareholder Returns (May 15, 2004). Journal of Financial Research, Vol. 37, No. 3, 2014, Available at SSRN: https://ssrn.com/abstract=1572971 or http://dx.doi.org/10.2139/ssrn.1572971

Sridhar Gogineni

The University of Tampa - John H. Sykes College of Business ( email )

401 W. Kennedy Blvd.
Tampa, FL 33606-1490
United States
8132533163 (Phone)

John Puthenpurackal (Contact Author)

University of Nevada, Las Vegas - Department of Finance ( email )

4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States

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