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Target governance provisions and acquisition types

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  • Gogineni, Sridhar
  • Upadhyay, Arun

Abstract

We examine the role of target firms’ governance characteristics in determining their survival status and acquirer type. We find that conditional on being a takeover target, firms with a powerful board, those that are insider dominated and immune from shareholder oversight, are more likely to undergo a private equity backed buyout compared to acquisition by public firms or a non-private equity backed buyout. We document a positive (negative) relationship between anti-takeover provisions and the likelihood of being acquired by a public company (going-private transaction). Firms do not seem to change their governance characteristics in anticipation of being taken over. Overall, our results from multinomial regressions provide robust support for the notion that likelihood of being a target and undergoing a specific type of transaction is a matching process in which both the target and the acquirer try to maximize their own welfare.

Suggested Citation

  • Gogineni, Sridhar & Upadhyay, Arun, 2020. "Target governance provisions and acquisition types," Journal of Business Research, Elsevier, vol. 110(C), pages 160-172.
    • Handle: RePEc:eee:jbrese:v:110:y:2020:i:c:p:160-172
    DOI: 10.1016/j.jbusres.2020.01.018
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    More about this item

    Keywords

    Governance characteristics; Board control; Antitakeover provisions; Acquirer type; Going-private;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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