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Essays on Takeovers of Privately-Held Targets

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Date Issued:
2007
Summary:
Takeovers of privately-held targets have outnumbered takeovers of publiclytraded targets over the years. This dissertation focuses on takeover activities of privatelyheld targets and examines several important issues which have never been touched on in the literature. The first essay examines the factors that determine the choice between a privately-held target and a publicly-traded target. After the size of the target and the prevalence of private firms in each industry in each year are controlled for, I find that the stock bidder tends to target a privately-held firm and the cash bidder tends to target a publicly-traded firm when pursuing a high-tech target. When acquiring a firm in the same industry and being inexperienced in takeover activities, the bidder is more likely to target a publicly-traded firm as opposed to a privately-held firm. The passage of the SarbanesOxley Act (SOX) also has an affect on the choice of a privately-held target or a publiclytraded target; everything else being equal, the cash bidder is more likely choose to acquire a private firm while the stock bidder is less likely to choose a private firm upon the introduction of SOX. The second essay examines the factors that influence the choice of stock versus cash payment in takeovers of privately-held targets. Stock is found to be more frequently used among takeovers in which the bidding firm has more debt and less free cash flow prior to the deal , the target is a high-tech firm, and the target management is retained in the combined entity. In addition, since the adoption of SOX, cash has been used more frequently and to greater extent among the sample of takeovers of privatelyheld targets. The third essay examines the effects of restrictions on resale of stock issued in takeovers on the bidder's wealth effect and long-run stock price performance. I find that restrictions on resale of stock are more popular among takeovers of privately-held targets as compared to takeovers of publicly-traded targets. Restrictions on resale are found to be positively related to the bidder's announcement abnormal return and negatively related to the bidder's long-run stock price performance.
Title: Essays on Takeovers of Privately-Held Targets.
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Name(s): Ngo, Thanh, author
Madura, Jeff, Thesis advisor
Florida Atlantic University, Degree Grantor
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Created: 2007
Date Issued: 2007
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 209 p.
Language(s): English
Summary: Takeovers of privately-held targets have outnumbered takeovers of publiclytraded targets over the years. This dissertation focuses on takeover activities of privatelyheld targets and examines several important issues which have never been touched on in the literature. The first essay examines the factors that determine the choice between a privately-held target and a publicly-traded target. After the size of the target and the prevalence of private firms in each industry in each year are controlled for, I find that the stock bidder tends to target a privately-held firm and the cash bidder tends to target a publicly-traded firm when pursuing a high-tech target. When acquiring a firm in the same industry and being inexperienced in takeover activities, the bidder is more likely to target a publicly-traded firm as opposed to a privately-held firm. The passage of the SarbanesOxley Act (SOX) also has an affect on the choice of a privately-held target or a publiclytraded target; everything else being equal, the cash bidder is more likely choose to acquire a private firm while the stock bidder is less likely to choose a private firm upon the introduction of SOX. The second essay examines the factors that influence the choice of stock versus cash payment in takeovers of privately-held targets. Stock is found to be more frequently used among takeovers in which the bidding firm has more debt and less free cash flow prior to the deal , the target is a high-tech firm, and the target management is retained in the combined entity. In addition, since the adoption of SOX, cash has been used more frequently and to greater extent among the sample of takeovers of privatelyheld targets. The third essay examines the effects of restrictions on resale of stock issued in takeovers on the bidder's wealth effect and long-run stock price performance. I find that restrictions on resale of stock are more popular among takeovers of privately-held targets as compared to takeovers of publicly-traded targets. Restrictions on resale are found to be positively related to the bidder's announcement abnormal return and negatively related to the bidder's long-run stock price performance.
Identifier: FA00000608 (IID)
Note(s): College of Business
Dissertation (Ph.D.)--Florida Atlantic University, 2007.
Subject(s): United States --Sarbanes-Oxley Act of 2002
Consolidation and Merger of Corporations--United States
Success in Business
Sale of Business Enterprises
Held by: Florida Atlantic University Digital Libraries
Sublocation: Digital Library
Persistent Link to This Record: http://purl.flvc.org/fau/fd/FA00000608
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Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.