Leverage and corporate performance: Evidence from unsuccessful takeovers

• 成果类型: Article
• 署名作者: Safieddine, A; Titman, S
• 署名单位: Michigan State University; Michigan State University's Broad College of Business; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00117
• 发表日期: 1999
• 页码: 547-580
• 关键词: INTERFIRM TENDER OFFERS; management buyouts; capital structure; operating performance; MANAGERIAL DISCRETION; FINANCING POLICIES; SHARE REPURCHASES; CONTROL CONTESTS; EMPIRICAL POWER; TEST STATISTICS

摘要

This paper finds that, on average, targets that terminate takeover offers significantly increase their leverage ratios. Targets that increase their leverage ratios the most reduce capital expenditures, sell assets, reduce employment, increase focus, and realize cash flows and share prices that outperform their benchmarks in the five years following the failed takeover. Our evidence suggests that leverage-increasing targets act in the interests of shareholders when they terminate takeover offers and that higher leverage helps firms remain independent not because it entrenches managers, but because it commits managers to making the improvements that would be made by potential raiders.