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  5. Are Corporate Restructuring Events Driven by Common Factors? Implications for Takeover Prediction
 
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Are Corporate Restructuring Events Driven by Common Factors? Implications for Takeover Prediction

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Author(s)
Powell, Ronan 
Yawson, Alfred 
Uri
http://hdl.handle.net/10197/7491
Date Issued
October 2007
Date Available
12T15:20:35Z February 2016
Abstract
The paper shows that variables commonly used in takeover prediction models also help to explain the likelihood of several other restructuring events, including divestitures,bankruptcies and significant employee lay offs. This finding helps to explain the larger misclassification errors in binomial takeover prediction models commonly used in prior research.The results show that modelling takeover prediction models in a binomial setting is likely to lead to misspecification in the parameter estimates and, further, result in erroneous conclusions about the determinants of takeover likelihood. The paper shows that controlling for other restructuring events by using a multinomial framework results in consistently lower misclassification errors in out-of-sample prediction tests, when compared to the benchmark of a typical binomial model.
Other Sponsorship
Sir Harley Stewart Trust
Type of Material
Journal Article
Publisher
Wiley
Journal
Journal of Business Finance and Accounting
Volume
34
Issue
7-8
Start Page
1169
End Page
1192
Copyright (Published Version)
2007 Blackwell Publishing Ltd
Keywords
  • Corporate restructuri...

  • Takeovers

  • Divestitures

  • Layoffs

  • Bankruptcies

  • Type II error

DOI
10.1111/j.1468-5957.2007.02028.x
Language
English
Status of Item
Peer reviewed
This item is made available under a Creative Commons License
https://creativecommons.org/licenses/by-nc-nd/3.0/ie/
Owning collection
Business Research Collection
Scopus© citations
35
Acquisition Date
Mar 21, 2023
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