2000
Halina Frydman, Roman Frydman, and Susanne Trimbath
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. These findings, moreover, appear to be remarkably stable over the nearly two decades spanned
by the sample. The effect of the variables measuring the risk-size relationship, however, indicate 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.
Halina Frydman
Institution: Stern School of Business, New York University
Email: hfrydman@stern.nyu.edu
Telephone: (212) 998-0453
Roman Frydman
Institution: Department of Finance, New York University
Email: rfrydman@stern.nyu.edu
Telephone: (212) 998-8967
Susanne Trimbath
Institution: Milken Institute, Santa Monica, CA
Telephone: (310) 998-8449
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