Ownership, Board Characteristics and Non-Hostile Take-Overs in the UK: An Empirical and Predictive Analysis
45 Pages Posted: 10 Oct 2001
Date Written: October 2001
This paper analyses the corporate governance mechanisms of a sample of companies that have been acquired by friendly take-over and those of a matching control sample that have not. It also uses a holdout sample to assess the model's ability to correctly classify take-over candidates. The results show that the targets were poor performers and that there are significant governance differences between the friendly take-over targets and the control sample. The inclusion of governance characteristics enables the model to differentiate between target and non-target companies when predicting acquisition probability.
Keywords: Corporate governance; The market for corporate control; Cadbury Committee; Board independence; Friendly takeovers; Hostile takeovers; Model prediction; Ownership; Firm performance; Firm age; Director quality; UK, small quoted companies
JEL Classification: D21, G32, G34, L21
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