Books and journals Case studies Expert Briefings Open Access
Advanced search

Financial buyers in Takeovers: focus on cost efficiency

Halina Frydman (Associate Professor, Stern School of Business, New York University, New York, NY 10012)
Roman Frydman (Professor, Department of Economics, New York University, New York, NY 10003)
Susanne Trimbath (Research Economist, Milken Institute, 1250 4th Street, Santa Monica, CA 90401)

Managerial Finance

ISSN: 0307-4358

Publication date: 1 December 2002

Abstract

This paper examines whether financial buyers are more likely to initiate takeovers of inefficient firms. We show that they indeed are and thus conclude that takeovers by financial buyers play a potentially beneficial role in the allocation of corporate assets in the US. economy. Our analysis of determinants of takeovers initiated by financial buyers uses an application of the methodology developed in Trimbath, Frydman and Frydman (2001). In order to illustrate efficiency enhancements introduced by financial buyers, we select Forstmann Little’s acquisition of General Instrument for a brief case study. We show that their aggressive programs of cost management substantially improved the efficiency of General Instrument. Moreover, it allowed General Instrument to expand research and development to become the global leader in high definition television.

Keywords

  • Accounting research
  • Mergers and acquisitions
  • Efficiency
  • Financial investment
  • USA

Citation

Frydman, H., Frydman, R. and Trimbath, S. (2002), "Financial buyers in Takeovers: focus on cost efficiency", Managerial Finance, Vol. 28 No. 12, pp. 1-13. https://doi.org/10.1108/03074350210768176

Download as .RIS

Publisher

:

MCB UP Ltd

Copyright © 2002, MCB UP Limited

Please note you do not have access to teaching notes

You may be able to access teaching notes by logging in via Shibboleth, Open Athens or with your Emerald account.
Login
If you think you should have access to this content, click the button to contact our support team.
Contact us

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
Login
To rent this content from Deepdyve, please click the button.
Rent from Deepdyve
If you think you should have access to this content, click the button to contact our support team.
Contact us
Emerald Publishing
  • Opens in new window
  • Opens in new window
  • Opens in new window
  • Opens in new window
© 2021 Emerald Publishing Limited

Services

  • Authors Opens in new window
  • Editors Opens in new window
  • Librarians Opens in new window
  • Researchers Opens in new window
  • Reviewers Opens in new window

About

  • About Emerald Opens in new window
  • Working for Emerald Opens in new window
  • Contact us Opens in new window
  • Publication sitemap

Policies and information

  • Privacy notice
  • Site policies
  • Modern Slavery Act Opens in new window
  • Chair of Trustees governance statement Opens in new window
  • COVID-19 policy Opens in new window
Manage cookies

We’re listening — tell us what you think

  • Something didn’t work…

    Report bugs here

  • All feedback is valuable

    Please share your general feedback

  • Member of Emerald Engage?

    You can join in the discussion by joining the community or logging in here.
    You can also find out more about Emerald Engage.

Join us on our journey

  • Platform update page

    Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

  • Questions & More Information

    Answers to the most commonly asked questions here