Target Governance Provisions and Acquisition Types

40 Pages Posted: 15 Mar 2012 Last revised: 11 Mar 2020

See all articles by Sridhar Gogineni

Sridhar Gogineni

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

Arun Upadhyay

Florida International University (FIU)

Date Written: February 6, 2020

Abstract

We examine the role of target firms’ governance characteristics in determining their survival status and acquirer type. We find that conditional on being a takeover target, firms with a powerful board, i.e., those that are insider dominated and immune from shareholder oversight, are more likely to undergo a private equity backed buyout compared to acquisition by public firms or a non-private equity backed buyout. We document a positive (negative) relationship between anti-takeover provisions and the likelihood of being acquired by a public company (going-private transaction). Firms do not seem to change their governance characteristics in anticipation of being taken over. Overall, our results from multinomial regressions provide robust support for the notion that likelihood of being a target and undergoing a specific type of transaction is a matching process in which both the target and the acquirer try to maximize their own welfare.

Keywords: governance characteristics; board control; antitakeover provisions; acquirer type; going-private

JEL Classification: G34, G38

Suggested Citation

Gogineni, Sridhar and Upadhyay, Arun, Target Governance Provisions and Acquisition Types (February 6, 2020). Journal of Business Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2022151 or http://dx.doi.org/10.2139/ssrn.2022151

Sridhar Gogineni (Contact Author)

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

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

Arun Upadhyay

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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