Predicting mergers and acquisitions : a study of Tobin's Q.
This paper attempts to document the relations between takeover probability and a comprehensive set of takeover determinants, with an emphasis on Tobin’s Q. We find firms characterized by low Q ratios are more likely to be the targets of takeovers. This study makes use of a modified methodology that...
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| Main Authors: | , , |
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| Other Authors: | |
| Format: | Final Year Project |
| Language: | English |
| Published: |
2009
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| Subjects: | |
| Online Access: | http://hdl.handle.net/10356/18927 |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | This paper attempts to document the relations between takeover probability and a comprehensive set of takeover determinants, with an emphasis on Tobin’s Q. We find firms characterized by low Q ratios are more likely to be the targets of takeovers. This study makes use of a modified methodology that takes into account industry-wide levels in Q ratios. The results indicate that the industry-adjusted Q produces a more significant and accurate measure in determining takeovers targets. Analysis has also been done to examine whether takeovers motivated by low Q ratios are due to market misvaluation or the Q-theory of investments. We find insignificant support for the Q-theory of investments which implies that management inefficiencies have limited explanatory power for the takeover sample in this study. |
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