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Updated: Oct 5, 2025

Using the Threat Probability Task to Assess Anxiety and Fear During Uncertain and Certain Threat
Published on: September 12, 2014
Do hostile takeover threats matter? Evidence from credit ratings
Pattanaporn Chatjuthamard1, Viput Ongsakul2,3, Pornsit Jiraporn4
1Center of Excellence in Management Research for Corporate Governance and Behavioral Finance, SASIN School of Management, Chulalongkorn University, Bangkok, Thailand.
Abstract:
Exploiting a novel measure of takeover vulnerability mainly based on state legislations, we explore the effect of hostile takeover threats on credit ratings. Our results reveal that companies with more takeover exposure are assigned significantly better credit ratings. In particular, a rise in takeover vulnerability by one standard deviation results in an improvement in credit ratings by 7.89%. Our findings are consistent with the view that the disciplinary mechanism associated with the takeover market mitigates agency problems and ultimately raises firm value. Further analysis corroborates our conclusion, including propensity score matching, entropy balancing, and an instrumental-variable analysis. As our proxy for takeover susceptibility is plausibly exogenous, our results are more likely to show a causal effect.
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