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Title: Takeover market efficiency and the interplay with corporate governance : new empirical perspectives on merger and acquisition performance and bid resistance
Author: Carline, Nicholas F.
Awarding Body: Lancaster University
Current Institution: Lancaster University
Date of Award: 2007
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This thesis investigates the interplay between the efficiency of the takeover market and firm level corporate governance mechanisms. Part I presents new evidence on operating performance changes associated with corporate mergers, and the association of these changes with the governance characteristics of the bidder. Board ownership is found to be positively associated with performance improvements, but the overall influence of board ownership is attenuated by the dispersion of ownership across board members. It is also found that the presence of large outside blockholdings is positively associated with performance improvements, but that larger boards are associated with smaller improvements. When there is a mismatch in the qualities of the management team improvements suffer. Merger-related market revaluations significantly predict future industry adjusted cash flow returns only when controlling for these governance and managerial incentive related factors. Part II provides unique evidence that the contrasting motives behind bid resistance determine the nature of opposition strategies, and ultimately affect stockholder and manager related outcomes in divergent ways. Firms resorting to entrenchment orientated opposition strategies are found to have C.E.O.s with larger control stakes, and other directors with ownership incentives less closely aligned to stockholders, as distinct from firms using resistance tactics purely designed for information leakage purposes. Also, entrenchment resisting firms have less independent boards, and are exposed to less discipline from active outside blockholders. Furthermore, pro-stockholder resistance is associated with lower initial bid premiums, implying that, un like for entrenchment motivated opposition, the intention is not to avoid being taken over, but to actively seek a superior offer. Bidders do not seem to pre-empt the nature of bid resistance when shaping their initial offers, but stockholder returns are adversely affected by the expectation of an entrenchment opposition strategy. and managers have a greater likelihood of being disciplined as a result of using such tactics.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available