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The selection of friendly take‐over targets in the UK: some empirical evidence

The selection of friendly take‐over targets in the UK: some empirical evidence The vast majority of the acquisitions of UK-quoted companies are friendly. This paper compares the accounting, financial and governance characteristics of firms that were acquired by friendly take-over with those of firms that were not taken over. Evidence is found that targets exhibited superior performance in terms of the return on assets and the sales-to-assets ratio. However, they underperformed in terms of capital expenditure and the market-to-book ratio. No difference was found in the extent to which targets adopted the board structures recommended in the Code of Best Practice. The results therefore suggest that acquirers target firms that are relatively undervalued by the capital market but do not show signs of poor profitability or ineffective board structures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

The selection of friendly take‐over targets in the UK: some empirical evidence

Management Decision , Volume 41 (6): 8 – Aug 1, 2003

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References (14)

Publisher
Emerald Publishing
Copyright
Copyright © 2003 MCB UP Ltd. All rights reserved.
ISSN
0025-1747
DOI
10.1108/00251740310484876
Publisher site
See Article on Publisher Site

Abstract

The vast majority of the acquisitions of UK-quoted companies are friendly. This paper compares the accounting, financial and governance characteristics of firms that were acquired by friendly take-over with those of firms that were not taken over. Evidence is found that targets exhibited superior performance in terms of the return on assets and the sales-to-assets ratio. However, they underperformed in terms of capital expenditure and the market-to-book ratio. No difference was found in the extent to which targets adopted the board structures recommended in the Code of Best Practice. The results therefore suggest that acquirers target firms that are relatively undervalued by the capital market but do not show signs of poor profitability or ineffective board structures.

Journal

Management DecisionEmerald Publishing

Published: Aug 1, 2003

Keywords: Accounting; Performance; Financial performance; United Kingdom

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