THE IMPACT OF MANAGERIAL OWNERSHIP ON ACQUISITION ATTEMPTS AND TARGETSHAREHOLDER WEALTH

This paper examines the relation between managerial ownership and the probability of being a target firm, and the impact of managerial owner ship on target shareholder returns. The paper finds that targets have lower managerial ownership than either their industry counterparts or randomly selected nontargets. Managerial ownership is significantly lo wer in contested compared to uncontested offers, and in unsuccessful c ompared to successful cases. Managerial ownership is significantly rel ated to abnormal returns in contested cases that are ultimately succes sful. The results are consistent with a positive impact of managerial ownership where it is used to negotiate, but not ultimately block, an acquisition.