Cost Inefficiency, Size of Firms and Takeovers

Susanne Trimbath, Halina Frydman, Roman Frydman

    Research output: Contribution to journalArticle

    Abstract

    This study, using the Cox proportional hazards model, finds that the risk of takeover rises with cost inefficiency. It also finds that a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. Moreover, these findings appear to be remarkably stable over the nearly two decades spanned by the sample. The effect of the variables used to measure the risk-size relationship, however, indicates temporal changes. Lastly, the study presents evidence from fixed-effects models of ex post cost efficiency improvements that support the hypothesis that takeover targets are selected based on the potential for improvement.

    Original languageEnglish (US)
    Pages (from-to)397-420
    Number of pages24
    JournalReview of Quantitative Finance and Accounting
    Volume17
    Issue number4
    DOIs
    StatePublished - 2001

    Keywords

    • Acquisitions
    • Corporate finance and governance
    • Econometric methods
    • Mergers
    • Models with panel data
    • Truncated and censored models

    ASJC Scopus subject areas

    • Accounting
    • Business, Management and Accounting(all)
    • Finance

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