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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 …
Do Poison Pills Increase Firm Risk?, Thomas Turk, Jeremy C. Goh, Candace Ybarra
Do Poison Pills Increase Firm Risk?, Thomas Turk, Jeremy C. Goh, Candace Ybarra
Research Collection Lee Kong Chian School Of Business
Management scholars have argued that an active takeover market discourages risk-taking by managers and that takeover defenses serve to counter the risk-reducing pressures of an active takeover market. This study employs the Black and Scholes Option Pricing Model to determine whether or not adoption of poison pill securities increases investor perceptions of firm risk. The results provide evidence that the Option-Implied Standard Deviations of common stock returns increase significantly on the poison pill adoption date, on average. Furthermore, the implied standard deviations remained significantly above pre-adoption levels for several days after the poison pill adoption, suggesting that the perceived increase …