Cost Inefficiency, Size of Firms and Takeovers

Susanne Trimbath, Halina Frydman, Roman Frydman

    Research output: Contribution to journalArticle

    Abstract

    This study, using the Cox proportional hazards model, finds that the risk of takeover rises with cost inefficiency. It also finds that a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. Moreover, these findings appear to be remarkably stable over the nearly two decades spanned by the sample. The effect of the variables used to measure the risk-size relationship, however, indicates temporal changes. Lastly, the study presents evidence from fixed-effects models of ex post cost efficiency improvements that support the hypothesis that takeover targets are selected based on the potential for improvement.

    Original languageEnglish (US)
    Pages (from-to)397-420
    Number of pages24
    JournalReview of Quantitative Finance and Accounting
    Volume17
    Issue number4
    StatePublished - 2001

    Fingerprint

    Cost inefficiency
    Industry
    Benchmark
    Costs
    Lag
    Fixed effects model
    Cox proportional hazards model

    Keywords

    • Acquisitions
    • Corporate finance and governance
    • Econometric methods
    • Mergers
    • Models with panel data
    • Truncated and censored models

    ASJC Scopus subject areas

    • Business, Management and Accounting(all)
    • Accounting
    • Finance

    Cite this

    Trimbath, S., Frydman, H., & Frydman, R. (2001). Cost Inefficiency, Size of Firms and Takeovers. Review of Quantitative Finance and Accounting, 17(4), 397-420.

    Cost Inefficiency, Size of Firms and Takeovers. / Trimbath, Susanne; Frydman, Halina; Frydman, Roman.

    In: Review of Quantitative Finance and Accounting, Vol. 17, No. 4, 2001, p. 397-420.

    Research output: Contribution to journalArticle

    Trimbath, S, Frydman, H & Frydman, R 2001, 'Cost Inefficiency, Size of Firms and Takeovers', Review of Quantitative Finance and Accounting, vol. 17, no. 4, pp. 397-420.
    Trimbath, Susanne ; Frydman, Halina ; Frydman, Roman. / Cost Inefficiency, Size of Firms and Takeovers. In: Review of Quantitative Finance and Accounting. 2001 ; Vol. 17, No. 4. pp. 397-420.
    @article{6fd2d34dfcdb4c7788ee6d2497e7d836,
    title = "Cost Inefficiency, Size of Firms and Takeovers",
    abstract = "This study, using the Cox proportional hazards model, finds that the risk of takeover rises with cost inefficiency. It also finds that a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. Moreover, these findings appear to be remarkably stable over the nearly two decades spanned by the sample. The effect of the variables used to measure the risk-size relationship, however, indicates temporal changes. Lastly, the study presents evidence from fixed-effects models of ex post cost efficiency improvements that support the hypothesis that takeover targets are selected based on the potential for improvement.",
    keywords = "Acquisitions, Corporate finance and governance, Econometric methods, Mergers, Models with panel data, Truncated and censored models",
    author = "Susanne Trimbath and Halina Frydman and Roman Frydman",
    year = "2001",
    language = "English (US)",
    volume = "17",
    pages = "397--420",
    journal = "Review of Quantitative Finance and Accounting",
    issn = "0924-865X",
    publisher = "Springer New York",
    number = "4",

    }

    TY - JOUR

    T1 - Cost Inefficiency, Size of Firms and Takeovers

    AU - Trimbath, Susanne

    AU - Frydman, Halina

    AU - Frydman, Roman

    PY - 2001

    Y1 - 2001

    N2 - This study, using the Cox proportional hazards model, finds that the risk of takeover rises with cost inefficiency. It also finds that a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. Moreover, these findings appear to be remarkably stable over the nearly two decades spanned by the sample. The effect of the variables used to measure the risk-size relationship, however, indicates temporal changes. Lastly, the study presents evidence from fixed-effects models of ex post cost efficiency improvements that support the hypothesis that takeover targets are selected based on the potential for improvement.

    AB - This study, using the Cox proportional hazards model, finds that the risk of takeover rises with cost inefficiency. It also finds that a firm faces a significantly higher risk of takeover if its cost performance lags behind its industry benchmark. Moreover, these findings appear to be remarkably stable over the nearly two decades spanned by the sample. The effect of the variables used to measure the risk-size relationship, however, indicates temporal changes. Lastly, the study presents evidence from fixed-effects models of ex post cost efficiency improvements that support the hypothesis that takeover targets are selected based on the potential for improvement.

    KW - Acquisitions

    KW - Corporate finance and governance

    KW - Econometric methods

    KW - Mergers

    KW - Models with panel data

    KW - Truncated and censored models

    UR - http://www.scopus.com/inward/record.url?scp=24044539970&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=24044539970&partnerID=8YFLogxK

    M3 - Article

    AN - SCOPUS:24044539970

    VL - 17

    SP - 397

    EP - 420

    JO - Review of Quantitative Finance and Accounting

    JF - Review of Quantitative Finance and Accounting

    SN - 0924-865X

    IS - 4

    ER -