Abstract
This study tests the ‘Market for Corporate Control’ hypothesis in a small open economy. The results appear to favour rejection of this hypothesis indicating that acquisitions have not been driven by managerial-disciplinary motives. Moreover, it is found that a logit model outperforms other statistical tests.
Notes
1 According to Palepu (Citation1986), state-based sampling means that n 1 firms are drawn from the target subpopulation N 1 and n 2 firms are drawn from the non-target sub-population N 2. State-based sampling outperforms the technique of random sampling, where n firms are drawn randomly from the entire population N. This technique would create a sample with very few targets or none, with consequent bias in parameter estimates.
2 In the case of T-test, a Levene-test was used to test for equality of variances in the two populations.