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Market reactions to hostile & friendly corporate takeovers : an empirical analysis

Meibom, B. (2025) Market reactions to hostile & friendly corporate takeovers : an empirical analysis.

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Abstract:Mergers & Acquisitions represent a central mechanism through which firms pursue growth, efficiency and strategic repositioning. Among them, the distinction between friendly and hostile takeovers remains a highly debated topic in M&A. While friendly takeovers are characterized by cooperation between the acquiring firm and the target firm’s management, hostile takeovers occur when the acquirer attempts to gain control without the support of the targets board. These contrasting dynamics come with different implications for firm governance, market perception, and shareholder value. The relevance of this topic remains evident in today’s corporate landscape. For instance, Musk’s acquisition of Twitter underscored the complexities of hostile acquisitions, including board resistance, strategic defenses and investor backlash. However, despite practical importance, the empirical evidence on how financial markets respond differently to hostile & friendly takeovers remain inconclusive. Many studies rely on older datasets or generalize the effect of hostility on target gains, without looking deeper into what factors play a role in shareholder value creation. This paper addresses this research gap by first defining how literature views characteristics of hostile & friendly takeovers, what theoretical underpinnings are present, as well as market reaction differences in target and acquiring firms. Next to that, this paper analyzes an updated dataset of M&A transactions and using an event study methodology to examine cumulative abnormal returns over a short-term event window, followed by a regression analysis that controls for factors such as payment method and relative deal size. Through this, the study contributes to a more detailed understanding of how the nature of a takeover influences perceived value creation and investor behavior.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:https://purl.utwente.nl/essays/106894
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