FIGURE 13.7Hostile versus Friendly Takeovers
Source:Bhide (1989).
Asyoucansee,targetfirmsinhostiletakeovershaveearneda
2.2 percent lower returnonequity, on average, thanother
firms in their industry; they have earned returns for their
stockholdersthatare 4 percentlower thanthemarket;and
only6.5percentoftheirstockisheldbyinsiders.Thetypical
targetfirmischaracterizedbypoorprojectchoiceandstock
price performance as well as low insider holdings.
Postacquisition Actions
Thereisalsoevidencethatfirmsmakesignificantchangesin
theway theyoperate after hostile takeovers.Bhide (1989)
examinedtheconsequencesofhostiletakeoversandnotedthe
following changes: