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The Role of Asset Structure, Ownership Structure, and Takeover Defenses in Determining Acquisition Likelihood

Published online by Cambridge University Press:  06 April 2009

Brent W. Ambrose  and
William L. Megginson
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Abstract

This paper extends the Palepu (1986) acquisition likelihood model by incorporating measures of insider and institutional shareholdings, by examining the deterrent effect of various takeover defenses, and by considering the effect of varying proportions of fixed (tangible) assets in a firm's total asset structure. We find that the probability of receiving a takeover bid is positively related to tangible assets, and negatively related to firm size and to the net change in institutional holdings. Blank-check preferred stock authorizations are the only common takeover defense significantly (negatively) correlated with acquisition likelihood.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 27 , Issue 4 , December 1992 , pp. 575 - 589
Copyright
Copyright © School of Business Administration, University of Washington 1992

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