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The Information Content of Defence Documents in UK Hostile Takeover Bids
Author(s) -
Cooke T. E.,
Luther R. G.,
Pearson B. R.
Publication year - 1998
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00180
Subject(s) - shareholder , tender offer , logit , logistic regression , business , linear discriminant analysis , outcome (game theory) , control (management) , economics , actuarial science , microeconomics , finance , econometrics , computer science , management , corporate governance , machine learning , artificial intelligence
This study examines the defence documents of 79 hostile take‐over bids of publicly quoted companies in the UK during the period 1988–1990 using logit regression and discriminant analysis to determine if any of the 41 identified characteristics of the defence document and seven continuous control variables lead to a higher or lower probability of a successful defence. The study finds that managers in target companies are unable to introduce new information in their defence documents that materially affects the outcome of a bid. This suggests that managers may advise shareholders to reject a bid for other reasons, such as to drive up the offer price.