Hostility in Takeovers: In the Eyes of the Beholder?

53 Pages Posted: 25 May 2006  

G. William Schwert

University of Rochester - Simon Business School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: April 1999

Abstract

This paper examines whether hostile takeovers can be distinguished from friendly takeovers, empirically, based on accounting and stock performance data. Much has been made of this distinction in both the popular and the academic literature, where gains from hostile takeovers are typically attributed to the value of replacing incumbent managers and the gains from friendly takeovers are typically attributed to strategic synergies. Alternatively, hostility could reflect just a perceptual distinction arising from different patterns of public disclosure, where negotiated outcomes are the rule and transactions tend to be characterized as friendly when bargaining remains undisclosed throughout, and hostile when the public becomes aware of the negotiation before its resolution. Empirical tests show that most deals described as hostile in the press are not distinguishable from friendly deals in economic terms, and that negotiations are publicized earlier in hostile transactions.

Suggested Citation

Schwert, G. William, Hostility in Takeovers: In the Eyes of the Beholder? (April 1999). NBER Working Paper Series, Vol. w7085, pp. -, 1999. Available at SSRN: https://ssrn.com/abstract=227425

G. William Schwert (Contact Author)

University of Rochester - Simon Business School ( email )

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Rochester, NY 14627
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HOME PAGE: http://schwert.ssb.rochester.edu

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