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Having more potential raiders weakens the takeover threat

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  • Toolsema, Linda A.

    (Groningen University)

Abstract

We argue in this paper that a more active market for corporate control may weaken the takeover threat. We show that an increase in the number of potential raiders tends to decrease the probability of a takeover. This in turn weakens managerial incentives. The lower managerial effort level that results in equilibrium negatively aspects the ex ante value of the firm.

Suggested Citation

  • Toolsema, Linda A., 2003. "Having more potential raiders weakens the takeover threat," Research Report 03F16, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    • Handle: RePEc:gro:rugsom:03f16
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    File URL: http://irs.ub.rug.nl/ppn/248291408
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    References listed on IDEAS

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    1. Haan, Marco A. & Riyanto, Yohanes, 2006. "The effects of takeover threats on shareholders and firm value," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 45-68, January.
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