Which Takeover Targets Overinvest?
J. OF FINANCIAL AND QUANTITATIVE ANALYSIS, December 1996
Posted: 11 Nov 1996
Abstract
Existing research finds little evidence of overinvestment by successfully-acquired targets. This paper shows how samples drawn from complete takeovers are biased against finding overinvestment, and documents evidence of overinvestment in targets which use a highly leveraged transaction to avoid a takeover. The evidence also suggests that these restructurings create value by mitigating the targets' overinvestment problems.
JEL Classification: G31
Suggested Citation: Suggested Citation
Hendershott, Robert J., Which Takeover Targets Overinvest?. J. OF FINANCIAL AND QUANTITATIVE ANALYSIS, December 1996, Available at SSRN: https://ssrn.com/abstract=7890
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