Managerial Performance, Tobin's Q, and the Gains from Successful Tender Offers
18 Pages Posted: 24 Sep 2008 Last revised: 30 Jul 2011
Date Written: July 28, 2011
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.
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