Ownership Structure, Board Composition and Non-Hostile Take-Overs in the UK: An Empirical Analysis

42 Pages Posted: 2 Sep 2002

See all articles by Charlie Weir

Charlie Weir

Robert Gordon University - Aberdeen Business School

David Laing

Robert Gordon University - Centre for the Enhancement of Learning and Teaching (CELT)

Date Written: August 14, 2002

Abstract

This paper analyses the board composition and ownership structures of a sample of companies that have been acquired by friendly take-over and those of a matching control sample that have not. We find significant governance differences between the friendly take-over targets and the control sample. Firms with the following characteristics were more likely to be acquired in a friendly take-over: they had the same person acting as CEO and chair, a higher proportion of non-executive directors, (as well as more independent, and recently appointed, non-executive directors), larger institutional shareholdings, higher executive director shareholdings and, more specifically, higher CEO shareholdings. These results are consistent with two agency-derived hypotheses, financial incentives and effective monitoring. We also find that targets exhibit lower growth potential but do not have worse accounting performance.

JEL Classification: G30, G34, G32, L20, L21

Suggested Citation

Weir, Charles and Laing, David, Ownership Structure, Board Composition and Non-Hostile Take-Overs in the UK: An Empirical Analysis (August 14, 2002). Available at SSRN: https://ssrn.com/abstract=323802 or http://dx.doi.org/10.2139/ssrn.323802

Charles Weir (Contact Author)

Robert Gordon University - Aberdeen Business School ( email )

Garthdee Road
RGU
Aberdeen AB10 7QE
United Kingdom
0044 1224 263800 (Phone)
0044 1224 263838 (Fax)

David Laing

Robert Gordon University - Centre for the Enhancement of Learning and Teaching (CELT) ( email )

Schoolhill
Aberdeen, Scotland AB10 1F
United Kingdom
0044 1224 262246 (Phone)
0044 1224 263344 (Fax)

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