TY - JOUR
T1 - Do hostile takeover threats matter? Evidence from credit ratings
AU - Chatjuthamard, Pattanaporn
AU - Ongsakul, Viput
AU - Jiraporn, Pornsit
N1 - Publisher Copyright:
Copyright: © 2022 Chatjuthamard et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
PY - 2022/1
Y1 - 2022/1
N2 - 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.
AB - 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.
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U2 - 10.1371/journal.pone.0260688
DO - 10.1371/journal.pone.0260688
M3 - Article
C2 - 35089950
AN - SCOPUS:85123727403
SN - 1932-6203
VL - 17
JO - PloS one
JF - PloS one
IS - 1 January
M1 - e0260688
ER -