Content Analysis Study of Food Advertisements and Children

Previous researchers interested in studying the risk of acquisition have approached the topic from either a cost inefficiency or agency cost perspective. This paper develops a theoretical model that combines cost inefficiency with agency costs to explain how management inefficiency negatively impacts firms in a Cournot quantity competition analysis. These theories are then used to explain why some firms survive the market for corporate control and others do not. Utilizing a binomial logit model, the empirical results support the agency cost hypothesis, whereby firms with less executive ownership are more likely to be taken over. However, the results do not support the cost inefficiency hypothesis that firms with greater cost inefficiencies are more likely to be taken over. These results appear robust over a multiple number of model specifications and the approach of considering both factors in the risk of takeover is promoted for future research