Bid Resistance by Takeover Targets: Managerial Bargaining or Bad Faith?

Thomas Bates, David A. Becher

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


This paper examines management's motives for rejecting takeover bids and the associated shareholder wealth effects. We develop measures of initial bid quality and find a significant negative correlation between the quality of a bid and rejection. The likelihood of higher follow-on offers decreases with bid quality and is greater when targets have classified boards and chief executive officers (CEOs) with significant personal wealth tied to the transaction. Target CEOs who fail to close high-quality offers experience a significant rate of forced turnover. Overall, the results support a price improvement motive for contested bids.

Original languageEnglish (US)
Pages (from-to)837-866
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Issue number3
StatePublished - Jun 1 2017

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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