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  

Sandy Klasa

University of Arizona - Department of Finance

Mike Stegemoller

Baylor University

Abstract

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

Klasa, Sandy and Stegemoller, Mike, Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences. Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=606081

Sandy Klasa (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-8761 (Phone)

Michael A. Stegemoller

Baylor University ( email )

P.O. Box 98004
Waco, TX 76798-8004
United States
254-710-4145 (Phone)

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