Be Wary of Rich Manipulators: Differences in the Performance of Different Corporate Structures in the Face of Hostile Takeovers

Ownership Structure, Hostile Takeover, Mergers and Acquisitions, Equity Liquidity

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September 19, 2022

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In light of the pressing concerns surrounding mergers and acquisitions (M&A) in recent times, the question “What sort of ownership structure is more likely to be bought in bad faith (hostile takeover)?” is addressed in this study. The disparities in company structures and the prospect of hostile takeovers are the primary topics discussed in this article. The research applies a regression model to the analysis of a substantial number of domestic M&A cases and overseas M&A cases involving Chinese firms that have occurred within the past several years. It has been discovered that businesses that have a high equity dispersion, high equity liquidity, poor operational capability of the firm, small total equity, and no dual equity structure are more susceptible to being taken over by an adversary. The findings of this study are more reliable because, in addition to taking into account local firms listed on the A-share market, it also takes into account Chinese businesses that are listed on international markets. The findings of the study can assist owners in enhancing their management practices, optimizing their equity structures, and gaining experience in warding off hostile takeovers.