How do industry peers respond to control threats?

Servaes, H and Tamayo, A (2014) How do industry peers respond to control threats? Management Science, 60 (2). pp. 380-399. ISSN 0025-1909


This paper studies how industry peers respond when another firm in the industry is the subject of a hostile takeover attempt. The industry peers cut their capital spending, free cash flows, and cash holdings, and increase their leverage and payouts to shareholders. They also adopt more takeover defenses. The stock price reaction upon announcement of the takeover is positive and larger for peer firms with higher capital spending and higher free cash flows. Before the takeover attempt, the peer firms borrow less and invest more than predicted. Both stock returns and performance improve after the takeover attempt. These results are consistent with the argument that the control threat has important spillover effects for the other firms in the industry.

More Details

Item Type: Article
Subject Areas: Finance
Additional Information:

© 2014 INFORMS

Date Deposited: 02 Mar 2016 18:51
Last Modified: 14 Jul 2024 00:47

Export and Share


Full text not available from this repository.


View details on Dimensions' website

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item