Purpose

This paper examines the relation between takeover likelihood and the documented underperformance of distressed company stocks while exploring two competing hypotheses. The failure risk explanation predicts lower returns to distressed firms with high probability of being acquired because the acquisition reduces risk and investors' required return. Conversely, the agency conflicts explanation predicts lower returns when acquisition is unlikely.

Design/methodology/approach

The likelihood of receiving a takeover bid is estimated, and portfolio tests explore the underperformance of distressed company stocks relative to non-distressed stocks across varying levels of takeover likelihood. Predictive regressions subsequently examine the relation between distress, takeover exposure and future firm operating performance including how the relation is affected by state anti-takeover laws.

Findings

Distressed stocks underperform non-distressed company stocks by economically and statistically significant margins when takeover likelihood is low, yet there is no evidence of underperformance among distressed stocks with moderate or high takeover exposure. Consistent with agency conflicts playing a key role, distressed firms that are disciplined by takeover threats invest more, use more leverage and experience higher future profitability. State-level anti-takeover legislation limits this disciplinary effect, however.

Originality/value

The results show that the well-documented distress anomaly is driven by a subset of distressed firms whose managers face limited pressure from the external takeover market. The evidence casts doubt on the failure risk explanation and suggests that agency conflicts play a key role.

中文翻译：

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财务困境、公司收购和困境异常

目的

本文在探索两个相互竞争的假设的同时，研究了收购可能性与不良公司股票表现不佳之间的关系。失败风险解释预测陷入困境的公司被收购的可能性较低，因为收购降低了风险和投资者的要求回报。相反，当收购不太可能时，代理冲突解释会预测较低的回报。

设计/方法/方法

估计收到收购要约的可能性，投资组合测试探讨了在不同收购可能性水平下，陷入困境的公司股票相对于非陷入困境的股票表现不佳。预测回归随后检查了困境、收购风险和未来公司经营业绩之间的关系，包括这些关系如何受到国家反收购法的影响。

发现

当收购可能性较低时，不良股票在经济和统计上的显着利润率低于非不良公司股票，但没有证据表明具有中等或高度收购风险的不良股票表现不佳。与扮演关键角色的代理冲突一致，受收购威胁约束的陷入困境的公司投资更多、使用更多杠杆并体验更高的未来盈利能力。然而，州级反收购立法限制了这种纪律效应。

原创性/价值

结果表明，有据可查的困境异常是由一部分陷入困境的公司驱动的，这些公司的经理面临来自外部收购市场的有限压力。证据对失败风险的解释提出了质疑，并表明代理冲突起着关键作用。