Do Termination Provisions Truncate the Takeover Bidding Process?
Year: 2006
Type: article
Abstract: We provide new evidence on termination provisions and the takeover bidding process. Our central contribution is a novel database from SEC documents that accurately measures the incidence of termination provisions and the depth of competition in takeover deals. We show that biased data in prior research produced incorrect conclusions on the relation between termination provisions and judicial decisions, bidder toeholds and deal size. Our comprehensive data also show that termination provisions are positively related to takeover competition. Our evidence is consistent with the information/commitment hypothesis in which termination provisions do not truncate bidding but instead culminate the takeover process.
Source: Review of Financial Studies
DOI: 10.1093/rfs/hhl009
Authors: Audra L. Boone, J. Harold Mulherin
Institutions: University of Kansas, University of Georgia
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3122884073