The Effect of Hostile Takeover Threats on Capital Structure: Evidence from Half a Century
1
Issued Date
2022-01-01
Resource Type
ISSN
19237529
eISSN
19238401
Scopus ID
2-s2.0-85148415784
Journal Title
Review of Economics and Finance
Volume
20
Start Page
524
End Page
528
Rights Holder(s)
SCOPUS
Bibliographic Citation
Review of Economics and Finance Vol.20 (2022) , 524-528
Suggested Citation
Chatjuthamard P., Chintrakarn P., Jiraporn P. The Effect of Hostile Takeover Threats on Capital Structure: Evidence from Half a Century. Review of Economics and Finance Vol.20 (2022) , 524-528. 528. doi:10.55365/1923.X2022.20.59 Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/84532
Title
The Effect of Hostile Takeover Threats on Capital Structure: Evidence from Half a Century
Author(s)
Author's Affiliation
Other Contributor(s)
Abstract
Capitalizing on a distinctive measure of takeover susceptibility mainly based on the staggered passage of anti-takeover state legislations, we examine the effect of the takeover market on corporate leverage. Stretching over half a century from 1964 to 2014, our sample includes nearly 180,000 observations and spans the entire spectrum of state laws in the past five decades. Our results show that more hostile takeover threats diminish leverage considerably. Specifically, an increase in takeover vulnerability by one standard deviation reduces leverage by 3.42%. Further analysis validates the results, i.e., propensity score matching, and entropy balancing.