Firm size and the effectiveness of the market for corporate control.

摘要

This study tests two mutually exclusive hypotheses regarding the relationship between firm size and the effectiveness of the market for corporate control. With a sample of 7,921 attempted acquisitions over the period from 1980-1999, this paper examines whether an acquirer's size impacts the likelihood of the firm becoming the target of a disciplinary takeover. Tests show that larger firms that subsequently become takeover targets make significantly worse acquisitions than larger firms that are not subsequently targeted yet, smaller firms that later become takeover targets make no worse acquisitions than smaller firms that are not targeted. Additionally, firms that attempt a disciplinary takeover suffer a decrease in shareholder wealth on average, regardless of the size of the target. In total, this study suggests that only the largest firms are susceptible to discipline by the market for corporate control, but any degree of discipline exerted by the market for corporate control is more likely a by-product of empire-building aspirations than a deliberate attempt to recoup value from bad bidders.