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Institutional investment, mergers and the market for corporate control

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<mark>Journal publication date</mark>03/1989
<mark>Journal</mark>International Journal of Industrial Organization
Issue number1
Volume7
Number of pages28
Pages (from-to)73-100
Publication StatusPublished
<mark>Original language</mark>English

Abstract

The increasing importance of institutional investors as shareholders in individual companies has led to an important debate on their impact on corporate performance. In this paper we focus on their role in the market for corporate control. This has so far been the subject of very little systematic investigation, despite its theoretical and practical significance. We consider the impact of financial institutions using two U.K. merger samples, and employing both univariate and multivariate techniques of analysis. In the first sample drawn from the low merger period 1981–1983 pre- and post-merger differences are found between merging companies with, and without a significant institutional presence. However, in the takeover boom year of 1986, from which the second sample is drawn, all such distinctions become blurred.