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

Brent W. Ambrose and William L. Megginson
The Journal of Financial and Quantitative Analysis
Vol. 27, No. 4 (Dec., 1992), pp. 575-589
DOI: 10.2307/2331141
Stable URL: http://www.jstor.org/stable/2331141
Page Count: 15
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Role of Asset Structure, Ownership Structure, and Takeover Defenses in Determining Acquisition Likelihood
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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.

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