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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
Published by: Cambridge University Press on behalf of the University of Washington School of Business Administration
Stable URL: http://www.jstor.org/stable/2331141
Page Count: 15
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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.
The Journal of Financial and Quantitative Analysis © 1992 University of Washington School of Business Administration