Corporate control contests and capital structure

Milton Harris; Artur Raviv

doi:10.1016/0304-405X(88)90040-2

Corporate control contests and capital structure

Milton Harris^*, Artur Raviv

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › peer-review

324 Scopus citations

Abstract

This paper explores the determinants of corporate takeover methods (proxy fights versus tender offers) and their outcomes and price effects. We focus on the effect of leverage on the takeover method and outcome. The model predicts, for example, that the target's stock price appreciates less following a successful proxy contest than in a successful tender offer. In addition, we obtain several other results on price effects and on the capital structure changes that accompany contests for corporate control. Some of our results are compared with the existing empirical evidence.

Original language	English (US)
Pages (from-to)	55-86
Number of pages	32
Journal	Journal of Financial Economics
Volume	20
Issue number	C
DOIs	https://doi.org/10.1016/0304-405X(88)90040-2
State	Published - Jan 1 1988

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

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10.1016/0304-405X(88)90040-2

Cite this

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AB - This paper explores the determinants of corporate takeover methods (proxy fights versus tender offers) and their outcomes and price effects. We focus on the effect of leverage on the takeover method and outcome. The model predicts, for example, that the target's stock price appreciates less following a successful proxy contest than in a successful tender offer. In addition, we obtain several other results on price effects and on the capital structure changes that accompany contests for corporate control. Some of our results are compared with the existing empirical evidence.

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Corporate control contests and capital structure

Abstract

ASJC Scopus subject areas

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