Predicting mergers and acquisitions : a study of Tobin's Q.
Chong, Hui Shan.
Lim, Jian Liang.
Tan, Keng Tiong.
Date of Issue2009
College of Business (Nanyang Business School)
This paper attempts to document the relations between takeover probability and a comprehensive set of takeover determinants, with an emphasis on Tobin’s Q. We find firms characterized by low Q ratios are more likely to be the targets of takeovers. This study makes use of a modified methodology that takes into account industry-wide levels in Q ratios. The results indicate that the industry-adjusted Q produces a more significant and accurate measure in determining takeovers targets. Analysis has also been done to examine whether takeovers motivated by low Q ratios are due to market misvaluation or the Q-theory of investments. We find insignificant support for the Q-theory of investments which implies that management inefficiencies have limited explanatory power for the takeover sample in this study.
DRNTU::Business::Finance::Mergers and acquisitions
Final Year Project (FYP)
Nanyang Technological University