Takeover, Distress, and Equity Issuance: Evidence from Korea

53 Pages Posted: 11 Jul 2019

See all articles by Euna Cho

Euna Cho

Bank of Korea - Economic Research Institute

Date Written: July 1, 2019


We study the motive and the economic effects of takeover in Korea, which has not been actively studied due to difficulties in collecting data. Using the data of largest shareholder change disclosed in the Korea Exchange's public disclosure system in 2004-2017, we estimate logit regressions of the likelihood that the firms to be a target. We also estimate panel regressions to examine the effect of takeovers on financial performances. The results show that takeovers in Korea occur in relation to financial distress, and that some companies tend to be targeted repeatedly. However, after the takeover, the financial distress is not resolved, indicating poor performance of takeovers motivated by financial distress.

Keywords: Takeovers, Financial distress, Equity issuance, Financial Performance, Method of Takeover

JEL Classification: G34, G32, G30, L25

Suggested Citation

Cho, Euna, Takeover, Distress, and Equity Issuance: Evidence from Korea (July 1, 2019). Bank of Korea WP 2019-19. Available at SSRN: https://ssrn.com/abstract=3412718 or http://dx.doi.org/10.2139/ssrn.3412718

Euna Cho (Contact Author)

Bank of Korea - Economic Research Institute ( email )

110, 3-Ga, Namdaemunno, Jung-Gu
Seoul 100-794
Korea, Republic of (South Korea)

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