“…In these booklets, different nominal owners that are closely related or exercise control through CEMs are grouped into 'owner spheres.' These spheres have been classified by the same person over an extended period of time, have been disclosed at least annually to the public, and have been used by several researchers in the past (Cronqvist & Nilsson, 2003;Doukas, Holmen, & Travlos, 2002;Hamberg, Overland, & Lantz, 2013;Holmén & Knopf, 2004;Rydqvist, 1987). 6 Typically, members of a sphere do not resolve differences through the voting mechanism (Rydqvist, 1987).…”
We analyze the distributional properties of ownership concentration measures and find that measures come from different underlying statistical distributions. Consistent with theory, some measures that are classified to represent a monitoring dimension have a positive influence on firm performance; other measures that are interpreted to represent a shareholder conflict dimension are negatively related to firm performance. However, other measures deviate from this pattern, and therefore, we cannot conclude that simple measures can replace complicated measures. Some measures are more suitable for analyzing the relationship between management and owners, whereas other measures are more suitable for analyzing the relationships among owners.
“…In these booklets, different nominal owners that are closely related or exercise control through CEMs are grouped into 'owner spheres.' These spheres have been classified by the same person over an extended period of time, have been disclosed at least annually to the public, and have been used by several researchers in the past (Cronqvist & Nilsson, 2003;Doukas, Holmen, & Travlos, 2002;Hamberg, Overland, & Lantz, 2013;Holmén & Knopf, 2004;Rydqvist, 1987). 6 Typically, members of a sphere do not resolve differences through the voting mechanism (Rydqvist, 1987).…”
We analyze the distributional properties of ownership concentration measures and find that measures come from different underlying statistical distributions. Consistent with theory, some measures that are classified to represent a monitoring dimension have a positive influence on firm performance; other measures that are interpreted to represent a shareholder conflict dimension are negatively related to firm performance. However, other measures deviate from this pattern, and therefore, we cannot conclude that simple measures can replace complicated measures. Some measures are more suitable for analyzing the relationship between management and owners, whereas other measures are more suitable for analyzing the relationships among owners.
“…Georganas and Nagel (2011) study English Auctions for the bidders acquiring a toehold and find that even though large toeholds can be effective in a takeover bid, the cost of acquiring them could be higher than the strategic benefit they bring. Hamberg et al (2013) find that bid announcement returns (BAR) for acquiring firms is significantly higher when the acquiring frim has a representative on the target frim's board of directors. They also find that the BAR is higher when large pre-bid shareholders of the target frim have agreed to tender their shares.…”
Purpose
This paper aims to examine empirically the role of toeholds in reducing asymmetric information in mergers and acquisitions by establishing a relationship between the toehold and some relevant characteristics of the acquiring and the target firm.
Design/methodology/approach
A regression analysis is conducted to examine the relation between the dependent variable (the toehold) and a set of independent variables. A multinomial logit model is used to test for the occurrence of toeholds. A probit selection model and two-step Heckman correction tests are used to correct the data and to check for robustness of the results.
Findings
The regression results for acquisitions with prior toeholds are consistent with the studied hypotheses that asymmetric information is more observed in foreign acquisitions, in different industries, with tender offers and with higher levels of intangible assets. A negative relationship is found between toehold size and the number of competing bidders.
Originality/value
Consistent with previous literature, the study finds that majority of bidders abstain from purchasing a toehold before entering a bid contest. The study also emphasizes the role of intangible assets in assessing the efficacy of toeholds under asymmetric information. The ratio of target intangible assets to target total serves as a proxy for asymmetric information. Regression results are consistent with the hypotheses that asymmetry of information is observed when the acquiring and the target firm operate in different countries and industries.
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