Revisiting the disciplinary role of failed takeover attempts

I find that the likelihood of CEO turnover in target firms following failed takeover attempts is negatively correlated with the target firms\u27 performance both prior to and during the failed takeover attempt. I also find that target firms that initiate corporate restructurings during the failed attempt have more positive stock returns in this period and are less likely to experience subsequent CEO turnover. When restructurings do not occur, an active outside blockholder is more likely to emerge and to facilitate the ouster of the target CEO. Together these findings indicate that failed takeover attempts act as wake-up calls either to target managers to make value-increasing improvements or to alternative control mechanisms to replace the incumbent managers