Ownership structure and target returns

Contrary to past literature, ownership defined as “all officers and directors” of the target firm has no association with target returns. Rather, we find that inside (managerial) ownership has a positive relation with target returns, whereas active-outside (non-managing director) ownership has a neg...

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Bibliographic Details
Published inJournal of corporate finance (Amsterdam, Netherlands) Vol. 15; no. 1; pp. 48 - 65
Main Authors Bauguess, Scott W., Moeller, Sara B., Schlingemann, Frederik P., Zutter, Chad J.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.02.2009
Elsevier
SeriesJournal of Corporate Finance
Subjects
Acquisitions
Firm value
Ownership
Target returns
Target returns Ownership Acquisitions Firm value
Acquisitions
Target returns
Ownership
G31
Firm value
G32
G34
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Summary:Contrary to past literature, ownership defined as “all officers and directors” of the target firm has no association with target returns. Rather, we find that inside (managerial) ownership has a positive relation with target returns, whereas active-outside (non-managing director) ownership has a negative relation with target returns. Using accounting-based versus market-based performance measures, we find that the relation between inside ownership and target returns is best explained by takeover anticipation. Using bidder and synergy returns we find that the relation between outside ownership and target returns is best explained by outsiders' willingness to share gains with the bidder. While the relations are more pronounced for non-tender deals, they also hold for tender offers when active-outside ownership is corporate rather than institutional.
ISSN:0929-1199
1872-6313
DOI:10.1016/j.jcorpfin.2008.09.002