Abstract
This study examined the relationship between underperformance and takeover likelihood using stock-market and accounting-based financial measurements from companies in the UK, US and Canada over a period of 17 years (1988-2004), applying hierarchical binary logistic regression analysis. Despite the general wisdom in the financial literature that the external markets for corporate control are said to work actively as a disciplinary device through takeovers in Anglo-Saxon economies, our study could not confirm these outcomes statistically. This research detected no significant association between takeover likelihood and firm performance, implying that the disciplinary effect of takeovers is statistically non-existent.
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