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Intra-Industry Effects Of Takeovers: A Study Of The Operating Performance Of Rival Firms, Rupendra Paliwal
Intra-Industry Effects Of Takeovers: A Study Of The Operating Performance Of Rival Firms, Rupendra Paliwal
WCBT Faculty Publications
This paper investigates whether the managers of industry rivals act to mitigate their agency exposure and improve operating performance when one of the firms in the industry is subject to a takeover attempt. The results indicate that rival firms in general decrease free cashflows, improve operating performance, reduce capital expenditures, and increase leverage in response to a control threat within the industry. In particular, rival firms with potentially higher agency costs i.e., fewer investment opportunities and high cash or high free cashflows exhibit a higher reduction in cash levels and free cashflows subsequent to a control threat in their industry. …
Pre-Acquisition Characteristics Of The Acquirers, Rupendra Paliwal
Pre-Acquisition Characteristics Of The Acquirers, Rupendra Paliwal
WCBT Faculty Publications
Existing empirical literature has extensively analyzed post-acquisition performance of the acquirers to evaluate success of the takeover. The academic literature tends to agree that target shareholders benefit from takeovers; however takeovers benefits for acquiring firm’s shareholders have been questioned. A majority of empirical literature indicate acquisition announcements are associated with a decrease in acquiring shareholder’s wealth. While pre-acquisition characteristics of takeover targets have been extensively analyzed, empirical literature has not directly and comprehensively analyzed pre-acquisition financial and operating characteristics of the acquiring firms. In this paper, I examine pre-acquisition operating performance and governance characteristics of acquirers. Results suggest that bidders …