Hostility in Takeovers:

In the Eyes of the Beholder?

G. William Schwert

University of Rochester, Rochester, NY 14627
and National Bureau of Economic Research

Journal of Finance, 55 No. 6, (December 2000) 2599-2640.


This paper examines whether hostile takeovers can be distinguished from friendly takeovers, empirically, based on accounting and stock performance data. Much has been made of this distinction in both the popular and the academic literature, where gains from hostile takeovers result from replacing incumbent managers and gains from friendly takeovers result from strategic synergies. Alternatively, hostility could reflect strategic choices made by the bidder or the target. Empirical tests show that most deals described as hostile in the press are not distinguishable from friendly deals in economic terms, except that hostile transactions involve publicity as part of the bargaining process.

Key words: hostile takeover, poison pill, merger, tender offer, takeover premium, Q-ratio

JEL Classifications: G34


Cited 280 times in the SSCI and SCOPUS through 2016
© Copyright 2000, American Finance Association
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