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WEALTH CREATION AND BID RESISTANCE IN U.K. TAKEOVER BIDS
Author(s) -
HOLL PETER,
KYRIAZIS DIMITRIS
Publication year - 1997
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199706)18:6<483::aid-smj895>3.0.co;2-6
Subject(s) - shareholder , corporate governance , context (archaeology) , business , agency (philosophy) , resistance (ecology) , accounting , event study , sample (material) , agency cost , test (biology) , tender offer , principal–agent problem , finance , sociology , paleontology , social science , ecology , chemistry , chromatography , biology
In this paper we investigate the determinants of, and relationship between, wealth creation and bid resistance for a sample of 178 successful takeover bids in the U.K. Within the context of an event study approach we test a range of hypotheses against a background that recognizes the existence of agency conflict and the role of corporate governance mechanisms designed to mitigate its effect. The results obtained are interpreted within the context of the U.K. corporate environment. We find that wealth creation and bid resistance are mutually dependent on each other. We find evidence suggesting the presence of managerial and financial synergy but the absence of operational synergy. Our results also suggest that there is some conflict between managers and shareholders but that significant monitoring is exercised by the particular governance mechanisms we investigate. © 1997 by John Wiley & Sons, Ltd.