English, Article edition: Toeholds and takeover probability: implications for investment strategies J. Samuel Baixauli; Matilde O. Fernández

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Bookmark: http://trove.nla.gov.au/version/289
Physical Description
  • article
Language
  • English

Edition details

Title
  • Toeholds and takeover probability: implications for investment strategies
Author
  • J. Samuel Baixauli
  • Matilde O. Fernández
Physical Description
  • article
Notes
  • Purpose – The purpose of this paper is to propose various toehold indicators and analyse whether the models incorporating these indicators can be used to establish investment strategies. Design/​methodology/​approach – Logistic regression is used to test toehold indicator significance. Findings – The results reflect that the designed measures are positively correlated to the likelihood of launching a takeover, although the power of the models to predict out-sample takeovers is moderate, between 60.71 percent and 71.59 percent. The indicators allow us to design strategies which offer positive abnormal returns. In particular, abnormal return over the Fama-French factors is 0.5 percent. Originality/​value – Toeholds are used to initiate takeover processes. As previous studies have indicated, a toehold increases the likelihood of success in a tender offer. Nevertheless, the studies on takeover prediction do not include the toehold since it is a variable which is unobservable prior to the announcement of a takeover bid.
  • Return on investment, Take-overs
  • RePEc:eme:sefpps:v:26:y:2009:i:2:p:69-86
Language
  • English
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