Accept or Reject? The Influence of CEO, Institutional Ownership and Corporate Governance on Takeover Bid Recommendations

The extensive literature on target characteristics predominantly focuses on takeover likelihood; or, given the event of a bid, the likelihood of the success of a bid. This study endeavours to shed light on the role of the CEO around takeover activity, and the influences on the target board’s decision to either accept or reject a takeover offer. When looking at the ownership structure of the target, the bidder needs to trade off the degree of insider (board) ownership with the extent of other blockholder ownership (institutional investors). Using ASX listed firms that were targets between 2001 and 2007 where there is both CEO ownership and blockholder interest, we investigate which influence prevails