Bargaining power of targets: Takeover defenses and top-tier target advisors

Mine Ertugrul

Journal of Economics and Business, 2015, vol. 78, issue C, 48-78

Abstract: This paper examines whether takeover defenses (i.e., poison pills and classified boards) can enhance the bargaining position of the target firm, especially when the target advisor is a top-tier investment bank. I find that classified boards and poison pills are positively linked to target's share of merger gains, target announcement returns, and premiums when the target employs a top-tier advisor and the acquisition is initiated by the acquirer. These results support the argument that top-tier target advisors might be more effective in utilizing takeover defenses in deal negotiations to enhance the bargaining position of their client firms and help them capture higher returns and share of merger gains.

Keywords: Acquisitions; Takeover defenses; Top-tier advisors; Bargaining (search for similar items in EconPapers)
JEL-codes: G24 G30 G34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:78:y:2015:i:c:p:48-78

DOI: 10.1016/j.jeconbus.2014.12.001

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