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What determines takeover likelihood? A review and propositions for future research

Tunyi Tunyi Abongeh

Corporate Board: role, duties and composition, Volume: 18, Issue: 1, Pages: 36 - 46

Swansea University Author: Tunyi Tunyi Abongeh

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DOI (Published version): 10.22495/cbv18i1art3

Abstract

Prior takeover prediction research has advanced eight hypotheses to explain why specific firms are targeted through takeovers (Palepu, 1986; Powell, 2001; Tunyi, 2021a). However, takeover targets remain difficult to empirically predict ex-ante, perhaps because these established sets of hypotheses do...

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Published in: Corporate Board: role, duties and composition
ISSN: 1810-8601 2312-2722
Published: Virtus Interpress 2022
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URI: https://cronfa.swan.ac.uk/Record/cronfa65113
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first_indexed 2023-11-26T11:20:42Z
last_indexed 2023-11-26T11:20:42Z
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spelling v2 65113 2023-11-26 What determines takeover likelihood? A review and propositions for future research eefe2792c8eed5b49feede33981dfa53 Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2023-11-26 BAF Prior takeover prediction research has advanced eight hypotheses to explain why specific firms are targeted through takeovers (Palepu, 1986; Powell, 2001; Tunyi, 2021a). However, takeover targets remain difficult to empirically predict ex-ante, perhaps because these established sets of hypotheses do not substantially explain takeover likelihood (Danbolt, Siganos, & Tunyi, 2016). This paper reviews the literature on takeover prediction, particularly focusing on theory, propositions and testable hypotheses on the factors that drive firms’ takeover likelihood. Drawing from prior research outside this literature, the paper then develops conceptual arguments underlying six new predictors of firms’ takeover likelihood including; information asymmetry, mergers and acquisitions (M&A) rumours, financial distress, payroll synergies, share repurchases and industry competition. Specifically, we predict that a firm’s likelihood of receiving future takeover bids increases with merger rumours and industry competition and declines with information asymmetry and share repurchases. Additionally, takeover likelihood plausibly has an inverse U-shaped relationship with payroll excesses and the level of financial distress. Journal Article Corporate Board: role, duties and composition 18 1 36 46 Virtus Interpress 1810-8601 2312-2722 M&amp;A Targets, Target Characteristics, Takeover Prediction, Conceptual Hypotheses, Literature Review 26 4 2022 2022-04-26 10.22495/cbv18i1art3 http://dx.doi.org/10.22495/cbv18i1art3 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University Not Required 2024-01-03T11:11:53.8661711 2023-11-26T11:20:09.3562261 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Tunyi Tunyi Abongeh 1 65113__29349__0eb9b715b6e24c489be87741e48be1ed.pdf 65113.VOR.pdf 2024-01-03T11:10:13.0012314 Output 767065 application/pdf Version of Record true Copyright © 2022 The Author. Distributed under the terms of a Creative Commons Attribution 4.0 International License (CC BY 4.0). true eng https://creativecommons.org/licenses/by/4.0/
title What determines takeover likelihood? A review and propositions for future research
spellingShingle What determines takeover likelihood? A review and propositions for future research
Tunyi Tunyi Abongeh
title_short What determines takeover likelihood? A review and propositions for future research
title_full What determines takeover likelihood? A review and propositions for future research
title_fullStr What determines takeover likelihood? A review and propositions for future research
title_full_unstemmed What determines takeover likelihood? A review and propositions for future research
title_sort What determines takeover likelihood? A review and propositions for future research
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Tunyi Tunyi Abongeh
format Journal article
container_title Corporate Board: role, duties and composition
container_volume 18
container_issue 1
container_start_page 36
publishDate 2022
institution Swansea University
issn 1810-8601
2312-2722
doi_str_mv 10.22495/cbv18i1art3
publisher Virtus Interpress
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url http://dx.doi.org/10.22495/cbv18i1art3
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description Prior takeover prediction research has advanced eight hypotheses to explain why specific firms are targeted through takeovers (Palepu, 1986; Powell, 2001; Tunyi, 2021a). However, takeover targets remain difficult to empirically predict ex-ante, perhaps because these established sets of hypotheses do not substantially explain takeover likelihood (Danbolt, Siganos, & Tunyi, 2016). This paper reviews the literature on takeover prediction, particularly focusing on theory, propositions and testable hypotheses on the factors that drive firms’ takeover likelihood. Drawing from prior research outside this literature, the paper then develops conceptual arguments underlying six new predictors of firms’ takeover likelihood including; information asymmetry, mergers and acquisitions (M&A) rumours, financial distress, payroll synergies, share repurchases and industry competition. Specifically, we predict that a firm’s likelihood of receiving future takeover bids increases with merger rumours and industry competition and declines with information asymmetry and share repurchases. Additionally, takeover likelihood plausibly has an inverse U-shaped relationship with payroll excesses and the level of financial distress.
published_date 2022-04-26T11:11:55Z
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score 11.013731

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