Takeovers

David Hirshleifer

The New Palgrave Dictionary of Money and Finance 1993

Abstract:

This essay reviews a number of issues about takeovers, including the reasons for and the consequences of takeovers, the pitfalls in estimating takeover gains, the effects of different takeover mechanisms, that of managerial resistance and the means of payments, and the role of debt and managerial share ownership. It explains the average high stock returns of the targets and low returns of the bidders during the transaction period in the U.S. takeover market. It also analyzes the wealth distribution between different stakeholders and the effects of the regulation during the takeover process on the outcome of the takeover.

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