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Tender Offers and Target Management Responses: Managerial Entrenchment Versus Stockholder Interest Revisited
Author(s) -
Thosar Satish
Publication year - 1996
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1996.tb00865.x
Subject(s) - tender offer , shareholder , sample (material) , business , monetary economics , longitudinal sample , large sample , accounting , economics , finance , corporate governance , psychology , developmental psychology , chemistry , statistics , mathematics , chromatography
Defensive actions by managements facing hostile tender offers have generally been interpreted as entrenchment‐oriented behavior. In this paper, longitudinal wealth effects on target firm stockholders are examined for the 1978–1985 period. The sample of firms where target management resists the tender offer registers significantly higher post‐tender offer announcement gains as compared to the sample of firms where target management remains passive. The evidence appears to support the stockholder interest hypothesis.