A Logit Model for Predicting Takeover Targets in Corporate Mergers and Acquisitions.
详细信息
文摘
Mergers and acquisitions (M&；A) activities have been an important means in growing business. One key to successful M&；A is foreseeing the next acquisition candidates and evaluating thoroughly those companies prior to the acquisition. The problem is lack of analytical instrumentation in the literature for identifying potential takeover targets. The purpose of the study was to create a managerial model for identifying takeover targets by utilizing the significant firm characteristics that send strong signals to the M&；A market. Based on the prediction model renewed by Check,Walker,and Randall in identifying effectively the M&；A-relevant firm characteristics and the takeover probability,this study assessed the firm characteristics and accuracy of the acquisition prediction model. An explanatory,quantitative research design was employed to examine the relationships between firm characteristics and the likelihood of a company being acquired. Required data were collected from secondary databases,including Standard &； Poor's Compustat. Results from a binomial logistic regression model,which was used to construct the proposed managerial model,found that successful corporate acquisitions are associated with firm characteristics of liquidity,size,financial leverage,and growth-resource mismatch. These high information-carrying variables were then applied to construct the proposed managerial model in predicting takeover targets. This research creates positive social change in the capital market by assisting executives in making sound decision when buying and selling a company,resulting in a more successful M&；A that benefits all stakeholders.