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Managerial Performance, Tobin's Q, and the Gains from Successful Tender Offers

18 Pages Posted: 24 Sep 2008 Last revised: 30 Jul 2011

Larry H.P. Lang

The Chinese University of Hong Kong (CUHK) - Department of Finance

Ralph A. Walkling

Drexel University - Lebow College of Business

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: July 28, 2011

Abstract

For a sample of successful tender offers, we find that the shareholders of high q bidders gain significantly more than the shareholders of low q bidders. In general, the shareholders of low q targets benefit more from takeovers than the shareholders of high q targets. Typical bidders have persistently low q ratios prior to the acquisition announcement while target q ratios decline significantly over the five years before the tender offer. Our results are consistent with the view that takeovers of poorly managed targets by well-managed bidders have higher bidder, target, and total gains.

Suggested Citation

Lang, Larry H.P. and Walkling, Ralph A. and Stulz, René M., Managerial Performance, Tobin's Q, and the Gains from Successful Tender Offers (July 28, 2011). Journal of Finance, Vol. 24, pp. 137-154, 1989 . Available at SSRN: https://ssrn.com/abstract=918043

Hsien Ping Larry Lang (Contact Author)

The Chinese University of Hong Kong (CUHK) - Department of Finance ( email )

Shatin, N.T.
Hong Kong
+85 2 2609 7761 (Phone)
+85 2 2603 6586 (Fax)

Ralph August Walkling

Drexel University - Lebow College of Business ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
(215) 895-4920 (Phone)
(215) 895-6119 (Fax)

Rene M. Stulz

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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