Ownership Structure and Target Returns

47 Pages Posted: 12 Nov 2006 Last revised: 19 Nov 2011

See all articles by Scott W. Bauguess

Scott W. Bauguess

University of Texas at Austin - Department of Finance

Sara B. Moeller

University of Pittsburgh - Finance Group

Frederik P. Schlingemann

University of Pittsburgh - Finance Group; European Corporate Governance Institute (ECGI)

Chad J. Zutter

University of Pittsburgh

Date Written: December 1, 2007

Abstract

Contrary to past literature, active ownership, defined as all officers and directors of the target firm, has no association with target returns. Rather, we find that inside (managerial) ownership has a positive relation with target returns, whereas active-outside (non-managing director) ownership has a negative relation with target returns. The relation between inside ownership and target returns is best explained by takeover anticipation, whereas the relation between outside ownership and target returns is best explained by outsiders' willingness to share gains with the bidder. While the relation between target returns and ownership measures is generally more pronounced for non-tender deals, it is more pronounced for tender offers between active corporate ownership and target returns.

Keywords: target returns, ownerhsip, acquisition, firm value

JEL Classification: G31, G32, G34

Suggested Citation

Bauguess, Scott W. and Moeller, Sara B. and Schlingemann, Frederik Paul and Zutter, Chad J., Ownership Structure and Target Returns (December 1, 2007). Journal of Corporate Finance, Vol. 15, No. 1, 2009, Available at SSRN: https://ssrn.com/abstract=943998

Scott W. Bauguess

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Sara B. Moeller (Contact Author)

University of Pittsburgh - Finance Group ( email )

372 Mervis Hall
Pittsburgh, PA 15260
United States

Frederik Paul Schlingemann

University of Pittsburgh - Finance Group ( email )

368A Mervis Hall
Pittsburgh, PA 15260
United States
(412) 648 1847 (Phone)
(412) 648 1693 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Chad J. Zutter

University of Pittsburgh ( email )

352 Mervis Hall, Katz GSOB
University of Pittsburgh
Pittsburgh, PA 15260
United States
412-648-2159 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~czutter/

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