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The Influence of Governance Characteristics on the Strategic Response to a Failed Takeover Bid

In: Handbook of Top Management Teams

Author

Listed:
  • Sayan Chatterjee
  • Jeffrey S. Harrison
  • Donald D. Bergh

Abstract

Firms that are governed effectively are less likely to have to make strategic changes during times of stress. We demonstrate this idea by examining changes to diversification strategy in target firms subsequent to failed takeover attempts. We found a lower incidence of refocusing in firms with lower levels of inside director ownership and higher levels of outside director stock ownership, both of which are an indication of board independence. The implication is that effective governance prior to the takeover attempt resulted in a diversification strategy that did not require change, even after a major shock.

Suggested Citation

  • Sayan Chatterjee & Jeffrey S. Harrison & Donald D. Bergh, 2010. "The Influence of Governance Characteristics on the Strategic Response to a Failed Takeover Bid," Palgrave Macmillan Books, in: Frank Bournois & Jérôme Duval-Hamel & Sylvie Roussillon & Jean-Louis Scaringella (ed.), Handbook of Top Management Teams, chapter 58, pages 499-502, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-30533-5_59
    DOI: 10.1057/9780230305335_59
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    Cited by:

    1. Martin Bugeja & Yaowen Shan & Yanglan Zu, 2024. "The disciplinary role of unsuccessful takeovers and changes in corporate governance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 941-973, March.

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