2009
DOI: 10.1111/j.1468-036x.2007.00423.x
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Predicting European Takeover Targets

Abstract: "This article extends the Palepu (1986) acquisition likelihood model by incorporating measures of a technical nature, e.g. momentum, trading volume as well as a measure of market sentiment. We use the proposed model to predict takeover targets in a large sample of European and cross-border merger and acquisition deals and validate its performance on an in- and out-of-sample basis. The robustness of the proposed model is investigated across several dimensions. In addition we explore the ability of the model to … Show more

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Cited by 64 publications
(93 citation statements)
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References 31 publications
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“…(). Their study, based on an EU sample, shows that a ‘takeover timing portfolio’ generates a modest alpha of 0.58% per month between 1995 and 2003 (Brar et al., , p. 448). As discussed below, one potential reason for the gains reported by Brar et al.…”
Section: Introductionmentioning
confidence: 99%
“…(). Their study, based on an EU sample, shows that a ‘takeover timing portfolio’ generates a modest alpha of 0.58% per month between 1995 and 2003 (Brar et al., , p. 448). As discussed below, one potential reason for the gains reported by Brar et al.…”
Section: Introductionmentioning
confidence: 99%
“…Palepu (1986) found that low average excess return and low return on equity increased the likelihood of being acquired. Powell (1997) and Brar, Giamouridis, and Liodakis (2009) examined the impact of return on equity (ROE) on the likelihood of being acquired, although these studies did not focus on tech firms. We hypothesize that within the technology industry, firms with inefficient management are more likely to be acquired.…”
Section: Return On Equitymentioning
confidence: 99%
“…Prior research (e.g., Brar et al, 2009;Cremers et al, 2009;Palepu, 1986) employed logit models to estimate the relation between takeover probabilities and variables of interest. If earnings guidance by potential targets is associated with value reducing activities that could be curtailed by managers, then we expect the incidence of prior guidance to be positively related to the probability that a firm is acquired in a given quarter.…”
Section: Effect Of Guidance On the Probability Of Acquisitionmentioning
confidence: 99%