Journal of Corporate Finance Vol. 7 No. 2 2001
The role of managerial incentives in corporate acquisitions: the 1990s evidence
Abstract
This paper examines the relationship between the likelihood a firm is acquired and the governance and financial characteristics of the firm. Given many of the developments in the corporate control market in the late 1980s, I suspect that the process governing takeover likelihood may have changed in the 1990s. I examine a sample of 342 NYSE/AMEX firms that were acquired during the 1990–1997 period and compare them to a matched sample of nonacquired firms. I find that firms that were acquired over this period can be characterized as having lower managerial ownership and higher ownership by outsiders, particularly higher ownership by nonmanagement blockholders with board representation. The fact that managerial ownership is negatively related to takeover likelihood is consistent with studies using data from 1970s and 1980s. This suggests that managerial ownership helps managers maintain control, or alternatively that ownership proxies for how much managers care about control.
- DOI
- 10.1016/s0929-1199(01)00017-7
- Volume
- 7
- Issue
- 2
- Pages
- 125-149
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex