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Determinants of acquisition and failure: stylized facts and lessons for empirical studies

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  • Köke, Jens
Abstract
This study provides new stylized facts on the determinants of corporate failure and acquisition in Germany. It also offers important lessons for the design of empirical studies. We show that firms experiencing failure or acquisition are significantly different from surviving firms on a number of firm-specific characteristics, however the characteristics are similar for failing and acquired firms. This implies that firm failure and acquisition should be analyzed in combination. Second, we find that the industry distribution is significantly different for failure and acquisitions. This calls for some kind of industry-adjustment in empirical analyses. Third, the differences between surviving and failing (acquired) firms are similar, irrespective whether the respective firm characteristic is observed one or up to four or more years before failure (acquisition). This validates the findings of studies that use lags of only one year for explanatory variables.

Suggested Citation

  • Köke, Jens, 2001. "Determinants of acquisition and failure: stylized facts and lessons for empirical studies," ZEW Discussion Papers 01-30, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5385
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate governance; ownership structure; bankruptcy; acquisitions;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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