Corporate Aging and Takeover Risk

Review of Finance, Forthcoming

54 Pages Posted: 6 Jun 2013 Last revised: 25 Nov 2014

See all articles by Claudio F. Loderer

Claudio F. Loderer

University of Berne - Institute for Financial Management; European Corporate Governance Institute (ECGI)

Urs Waelchli

Rochester-Bern Executive Programs; University of Rochester - Simon Business School

Date Written: November 24, 2014


Although growth opportunities fade and profitability declines as firms mature, older firms are no more likely to be acquired than young firms are. This paper documents and explains that phenomenon. We argue that, because mature organizations are rationally less flexible, they are more costly to integrate and therefore comparatively unattractive acquisition candidates. The evidence supports this explanation of the negative age dependence of takeover hazard. The evidence also shows that negative exogenous shocks to merger benefits further reduce the takeover hazard of mature firms. We test many alternative explanations and find no evidence that they can explain the hazard decline.

Keywords: takeovers, financial distress, life cycle

JEL Classification: G30, L20

Suggested Citation

Loderer, Claudio F. and Waelchli, Urs, Corporate Aging and Takeover Risk (November 24, 2014). Review of Finance, Forthcoming, Available at SSRN: or

Claudio F. Loderer (Contact Author)

University of Berne - Institute for Financial Management ( email )

Engehaldenstrasse 4
Bern, CH-3012
+41 31 631 37 75 (Phone)
+41 31 631 84 21 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


Urs Waelchli

Rochester-Bern Executive Programs ( email )

Engehaldenstrasse 4
Bern, 3012

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

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