Predicting UK takeover targets

Some methodological issues and an empirical study

Paul Barnes*

*Corresponding author for this work

Research output: Contribution to journalArticle

36 Citations (Scopus)

Abstract

This paper examines the methodological issues of using accounting ratios to predict takeover targets. Certain improvements are suggested, notably the use of industry-relative ratios and the deterimination of an ex ante cut off point which maximizes returns. The empirical study suggests that industry-relative ratios are not an improvement upon industry-specific models and that, although the models perform better than chance, they do not perform sufficiently well as to earn excess returns. Unfortunately, the results are not sufficiently sensitive as to be significantly affected by the choice of cut off point.

Original languageEnglish
Pages (from-to)283-301
Number of pages19
JournalReview of Quantitative Finance and Accounting
Volume12
Issue number3
Publication statusPublished - 1999

Keywords

  • Acquisitions
  • Mergers
  • Prediction
  • Takeovers

Fingerprint Dive into the research topics of 'Predicting UK takeover targets: Some methodological issues and an empirical study'. Together they form a unique fingerprint.

Cite this