Business, Management and Accounting
8 years ago

Failed takeovers lead to increased leverage, asset sales, and improved performance.

The Journal of Finance
Leverage and Corporate Performance: Evidence from Unsuccessful Takeovers
Assem Safieddine, Sheridan Titman

Paper Summary

Targets that end takeover offers increase their debt levels. Those with the highest debt cuts spending, sells assets, and improves performance over five years. This shows that higher debt can benefit companies by encouraging better management decisions, not just protecting against takeovers.

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