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Do hostile takeover threats matter? Evidence from credit ratings
- Source :
- PLoS ONE, PLoS ONE, Vol 17, Iss 1, p e0260688 (2022)
- Publication Year :
- 2022
- Publisher :
- Public Library of Science, 2022.
-
Abstract
- Exploiting a novel measure of takeover vulnerability mainly based on state legislations, we explore the effect of hostile takeover threats on credit ratings. Our results reveal that companies with more takeover exposure are assigned significantly better credit ratings. In particular, a rise in takeover vulnerability by one standard deviation results in an improvement in credit ratings by 7.89%. Our findings are consistent with the view that the disciplinary mechanism associated with the takeover market mitigates agency problems and ultimately raises firm value. Further analysis corroborates our conclusion, including propensity score matching, entropy balancing, and an instrumental-variable analysis. As our proxy for takeover susceptibility is plausibly exogenous, our results are more likely to show a causal effect.
- Subjects :
- Epidemiology
Economics
Science
Entropy
Social Sciences
External Debt
Research and Analysis Methods
Instrumental Variable Analysis
Mathematical and Statistical Techniques
Sociology
State Law
Advertising
Medicine and Health Sciences
Industry
Statistical Methods
Marketing
Multidisciplinary
Approximation Methods
Physics
Statistics
Communications
Medical Risk Factors
Capital Expenditures
Physical Sciences
Medicine
Thermodynamics
Regression Analysis
Law and Legal Sciences
Mathematics
Finance
Research Article
Subjects
Details
- Language :
- English
- ISSN :
- 19326203
- Volume :
- 17
- Issue :
- 1
- Database :
- OpenAIRE
- Journal :
- PLoS ONE
- Accession number :
- edsair.doi.dedup.....1fd589f630cee913c38b8440900045ce