Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences
Financial Management, Forthcoming
48 Pages Posted: 19 Oct 2004
We study takeover sequences that contain at least five acquisitions made by an individual acquirer over a period greater than 12 months with no two acquisitions separated by more than 24 months. Acquisitions made in the context of such sequences represent more than 25% of takeover activity by U.S. public firms from 1982 to 1999. Our findings suggest takeover sequences are made in the context of time-varying changes in an acquiring firm's growth opportunity set. Specifically, our results indicate that takeover sequences begin subsequent to an expansion of this opportunity set and end when this opportunity set closes off. Our evidence does not support a proposition that a low quality acquisition is what causes a takeover sequence to end.
JEL Classification: G31, G34
Suggested Citation: Suggested Citation