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The Impact of Managerial Ownership on Acquisition Attempts and Target Shareholder Wealth

Published online by Cambridge University Press:  06 April 2009

Moon H. Song  and
Ralph A. Walkling
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Extract

This paper examines the relation between managerial ownership and the probability of being a target firm, and the impact of managerial ownership on target shareholder returns. The paper finds that targets have lower managerial ownership than either their industry counterparts or randomly selected nontargets. Managerial ownership is significantly lower in contested compared to uncontested offers, and in unsuccessful compared to successful cases. Managerial ownership is significantly related to abnormal returns in contested cases that are ultimately successful. The results are consistent with a positive impact of managerial ownership where it is used to negotiate, but not ultimately block, an acquisition.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 28 , Issue 4 , December 1993 , pp. 439 - 457
Copyright
Copyright © School of Business Administration, University of Washington 1993

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