The Impact of Managerial Ownership on Acquisition Attempts and Target Shareholder Wealth

20 Pages Posted: 23 Sep 2008 Last revised: 30 Jul 2011

See all articles by Moon H. Song

Moon H. Song

San Diego State University - Finance Department

Ralph A. Walkling

Drexel University - Lebow College of Business

Date Written: 1993

Abstract

This paper examines the relation between managerial ownership and the probability of being a target firm, and the impact of managerial ownership on target shareholder returns. The paper finds that targets have lower managerial ownership than either their industry counterparts or randomly selected nontargets. Managerial ownership is significantly lower in contested compared to uncontested offers, and in unsuccessful compared to successful cases. Managerial ownership is significantly related to abnormal returns in contested cases that are ultimately successful. The results are consistent with a positive impact of managerial ownership where it is used to negotiate, but not ultimately block, an acquisition.

Suggested Citation

Song, Moon H. and Walkling, Ralph August, The Impact of Managerial Ownership on Acquisition Attempts and Target Shareholder Wealth (1993). The Journal of Financial and Quantitative Analysis, Vol. 28, No. 4, pp. 439-457, December 1993. Available at SSRN: https://ssrn.com/abstract=918069

Moon H. Song (Contact Author)

San Diego State University - Finance Department ( email )

5500 Campanile Drive
San Diego, CA 92182-8236
United States
619-673-8925 (Phone)
619-594-1573 (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)

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