Uhlenkamp, Lisa M.; Schwe zle , Be nha d; Al hamme , Wilhelm
A icle
Can hedge unds p edic akeo e o e s and ou comes?
The in luence o hedge und owne ship on akeo e
likelihood and o e success
Schmalenbach Jou nal o Business Resea ch (SBUR)
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Sugges ed Ci a ion: Uhlenkamp, Lisa M.; Schwe zle , Be nha d; Al hamme , Wilhelm (2025) : Can
hedge unds p edic akeo e o e s and ou comes? The in luence o hedge und owne ship on
akeo e likelihood and o e success, Schmalenbach Jou nal o Business Resea ch (SBUR), ISSN
2366-6153, Sp inge , Heidelbe g, Vol. 77, Iss. 2, pp. 309-355,
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ORIGINAL ARTICLE
h ps://doi.o g/10.1007/s41471-025-00211-y
Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Can Hedge Funds P edic Takeo e O e s and
Ou comes?—The In luence o Hedge Fund Owne ship
on Takeo e Likelihood and O e Success
Lisa M. Uhlenkamp · Be nha d Schwe zle · Wilhelm Al hamme
Recei ed: 31 Janua y 2024 / Accep ed: 26 Feb ua y 2025 / Published online: 8 May 2025
© The Au ho (s) 2025
Abs ac This s udy in es iga es he impac o a company’s sha eholde s uc u e,
pa icula ly hedge und owne ship, on i s likelihood o become a ge o a akeo e
o e . Addi ionally, i explo es he consequences o such an o e wi hin he con ex
o he Ge man akeo e ma ke . In line wi h p io esea ch, we ind ha he p es-
ence o a hedge und s ake inc eases he likelihood o a i m ecei ing a akeo e
o e . Howe e , he unde lying easons o his co ela ion emain a subjec o deba e
in he academic li e a u e, speci ically whe he i is due o hedge unds’ supe io
in es men s a egies, hei ole as ac i is s, o hei access o p i a e in o ma ion.
We ind ha owne ship s uc u e is he p ima y p edic o o akeo e ac i i y, while
publicly a ailable da a o e s limi ed p edic i e powe . These indings, suppo ed by
supplemen a y es s, lend c edence o he hypo hesis ha hedge unds p o i om
p i a e in o ma ion. In ela ion o he ou come o a akeo e o e , we obse e ha
unique cha ac e is ics o Ge man co po a e law, pa icula ly he high le el o mino -
i y p o ec ion, empowe hedge unds o employ s a egies beyond he con en ional
specula ion on a akeo e o e . A p e alen s a egy among hedge unds in Ge -
man akeo e s en ails he specula ion on highe compensa ion h ough subsequen
s uc u al measu es, such as he signing o a domina ion ag eemen o a squeeze-
ou ollowing a success ul o e . This c ea es a pa icula p isone ’s dilemma o
Lisa M. Uhlenkamp
HHL Leipzig G adua e School o Managemen , Jahnallee 59, 04109 Leipzig, Ge many
E-Mail: [email protected]
Be nha d Schwe zle
Chai o Financial Managemen , HHL Leipzig G adua e School o Managemen ,
Jahnallee 59, 04109 Leipzig, Ge many
E-Mail: Be nha d.Schwe zle @hhl.de
Wilhelm Al hamme
Chai o Mac oeconomics, HHL Leipzig G adua e School o Managemen ,
Jahnallee 59, 04109 Leipzig, Ge many
E-Mail: Wilhelm.Al hamm[email p o ec ed]e
K
310 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
hedge unds as a ge sha eholde s: o maximize gains, hey should e ain om
ende ing hei sha es, while o he sha eholde s mus ende hei s o he o e o
succeed. Ou esul s on he impac o p e-o e hedge und owne ship e lec his
ension: we ind some e idence o a posi i e impac on o e success, hough his
e ec becomes insigni ican when ocusing on condi ional o e s wi h a minimum
accep ance h eshold. Fu he mo e, ou indings imply a nega i e ela ionship be-
ween p e-o e hedge und owne ship and he o e p emium, he eby suppo ing
he iew ha bidde s an icipa e hedge unds’ low sensi i i y o p emium inc eases
when deciding whe he o ende hei sha es. In conclusion, ou esul s unde sco e
he g owing in luence o hedge unds in Ge man akeo e o e s.
Keywo ds M&A · Takeo e likelihood · Hedge und · Owne ship s uc u e · O e
p emium
JEL Classi ica ion G14 · G18 · G23 · G32 · G34
1 In oduc ion
In July 2017, wo p i a e equi y i ms, Cin en and Bain, announced ha hei con-
di ional akeo e o e o STADA AG, a lis ed pha maceu ical company, wi h an
o e p ice o C66.25 had success ully passed he equi ed minimum accep ance a e.
Subsequen e en s included he acquisi ion o a subs an ial s ake in he a ge s ock
by he US hedge und Ellio , which hen h ea ened o block he o e equi ed o
he p oposed domina ion ag eemen . Ellio success ully demanded compensa ion o
C74.4 C pe sha e o all sha es. In he subsequen judicial e iew o he o e , he
compensa ion o all mino i y sha eholde s was u he inc eased o C81.73. In June
2020, he majo i y sha eholde s ini ia ed a squeeze-ou o he emaining mino i y a
a compensa ion o e C98.51.
This sequence o e en s has gi en ise o a public deba e abou he consequences
o inc easing hedge und ac i i ies in Ge many, shedding ligh on he engagemen
o hedge unds in akeo e o e s unde Ge man akeo e and co po a e law. The
p esen s udy aims o con ibu e o his discou se by analyzing he impac o hedge
und owne ship on he p obabili y o a company being a ge ed by a akeo e o e
and, a e an o e has been made, on he ou come o he o e .
The consequences o hedge unds engaging in capi al ma ke s a e gene ally con-
o e sial. C i ics and egula o s exp ess conce ns ha hedge unds may con ibu e
o inancial ma ke ola ili y and ampli y sys emic isk (Chan e al. 2006). Hedge
und ac i ism migh ha m sha eholde alue by being o e ly ocused on sho - e m
ou comes, neglec ing longe - e m p o i able in es men s. P oponen s, howe e , con-
end ha hedge unds possess a unique capaci y o in luence co po a e go e nance
decisions and enhance sha eholde alue in compa ison o o he ma ke pa icipan s,
such as mu ual and pension unds, he eby con ibu ing o he enhancemen o inan-
cial ma ke quali y. Lowe egula o y equi emen s enable concen a ed in es men
in selec i ms, ampli ied by highe le e age le els and augmen ed capi al lexibili y,
he eby building upon locked-in capi al. Mo eo e , hedge und manage s possess
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 311
s ong incen i es and a e less suscep ible o con lic ing in e es s a ising om hei
ole as ex e nal in es o s (B a e al. 2008; Aga wal e al. 2015; Bebchuk e al.
2015).
An impo an aspec o he discou se conce ns he ques ion o whe he hedge
unds a e be e able o p edic akeo e o e s. G eenwood and Scho (2009), Boyson
e al. (2017), and Dai e al. (2017) ha e ound ha he p e-o e hedge und s ake
in a i m is associa ed wi h a highe likelihood o ha i m becoming a akeo e
a ge . Howe e , he unde lying mechanisms emain a subjec o deba e. Speci ically,
he ques ion o whe he hedge unds possess supe io ading skills, ha e access
o con iden ial in o ma ion, o s imula e akeo e s by beha ing ac i ely emains
un esol ed.
The illici na u e o inside ading makes i challenging o di ec ly obse e he
leakage o p i a e in o ma ion ega ding impending akeo e o e announcemen s
ha is subsequen ly exploi ed by ade s. Con e sely, ading in umo ed a ge s
o e s an a ac i e in es men oppo uni y. Howe e , when in o ma ion is no public
bu only a ailable o a speci ic g oup o ma ke pa icipan s, i p o ides an un ai
ad an age, hus dis o ing he capi al alloca ion o he akeo e ma ke .
Hedge unds ha e inc eased hei in es men in he Ge man akeo e ma ke and
ha e become ele an playe s in he akeo e o e p ocess (Dobmeie e al. 2020).
Consequen ly, i is impo an o closely obse e hei ac ions o analyze hei impac
on he Ge man akeo e ma ke . This is pa icula ly ele an gi en ha he Ge man
ma ke o co po a e con ol has his o ically been o ien ed owa ds s akeholde s’
in e es s (employees, banks, bu also cus ome s and supplie s), and has con e ged in
ecen yea s o a s onge ocus on sha eholde s’ in e es (Mie zne e al. 2011). The
s ong mino i y p o ec ion o Ge man co po a e law enables a dis inc i e in es men
s a egy, used by hedge unds in ela ion o a akeo e o e , known as “backend” o
“endgame” specula ion. As in he abo e example o STADA, i may be ad an ageous
o hedge unds, as p e o e sha eholde s, o e ain om accep ing he akeo e o e
and ende hei sha es. This allows hem o specula e on he success o he o e and
he po en ial o highe compensa ion in a la e domina ion ag eemen o squeeze-
ou . This pape aims o con ibu e o a be e unde s anding o he consequences o
such a s a egy o he success o a akeo e o e .
The p esen s udy hypo hesizes ha hedge unds ac i ely ade based on p i a e
in o ma ion ega ding upcoming akeo e o e s. An ex ensi e panel da a se o Ge -
man publicly lis ed i ms om 2006–2020 is cons uc ed, consis ing o 5068 i m-
yea s, he eo 260 deals ha we e announced o 225 dis inc i ms. In o de o d aw
conclusions on a i m’s akeo e likelihood, we apply di e en ma ching p ocedu es.
This app oach enables us o in es iga e he hedge und s ake in ea men i ms (i.e.,
akeo e a ge s) compa ed agains ma ched con ol i ms (i.e., simila i ms and
hence po en ial a ge s). We also analyze he impac o hedge und owne ship on he
ou come o a akeo e o e .
The indings o his s udy lend suppo o he main hypo heses, sugges ing ha
he owne ship s uc u e o a i m se es as an impo an p edic o o akeo e deals.
Speci ically, he esul s indica e ha a g ea e hedge und s ake in a i m is associa ed
wi h a signi ican ly highe likelihood o akeo e , while a g ea e index und s ake
signi ican ly dec eases he p obabili y o acing a akeo e o e . Publicly obse able
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312 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
inancial, balance shee , and ma ke in o ma ion, such as he e u n on equi y o he
ma ke - o-book a io, appea o o e no subs an ial in o ma ion on which i m is
becoming a akeo e a ge and, consequen ly, is an in es men oppo uni y. This
esul p o ides i s e idence ha hedge unds migh possess p i a e in o ma ion on
impending akeo e o e s ha guides hei ading decisions, bu do no possess
supe io skills in in e p e ing public in o ma ion (Dai e al. 2017). To suppo hese
indings, we conduc a se ies o es s, he esul s o which indica e ha hedge
unds may bene i om p i a e in o ma ion by main aining close ies wi h ad iso s
o he a ge , such as inside s in ol ed in deal inancing. Fu he mo e, we ind
ha a ge s wi h a high le el o hedge und engagemen a e associa ed wi h be e
p edic ion benchma ks, i.e., a highe le el o co ec and a lowe le el o alse a ge
p edic ions. This sys ema ic ading pa e n is again indica i e o he exploi a ion o
p i a e in o ma ion.
We also examine he impac o hedge und owne ship on o e s ha ha e been
made and in es iga e whe he hedge und ades sys ema ically impac he ou come
o a akeo e o e . This occu s agains he backg ound o he po en ial “backend”
specula ion desc ibed abo e. This s a egy c ea es a pa icula p isone s’ dilemma o
hedge unds: o maximize gains, hey should e ain om ende ing hei sha es in o
he o e , as long as su icien ly many o he sha eholde s ende hei s o he o e
o succeed. The indings on he impac o p e-o e hedge und owne ship e lec
his ension. A highe hedge und s ake p io o he o e is associa ed wi h a highe
akeo e success a e; howe e , his e ec becomes insigni ican when ocusing on
condi ional o e s wi h a minimum accep ance h eshold. Fu he mo e, bidde s o e
lowe p emiums in akeo e o e s whe e he a ge has a highe hedge und s ake
as owne s. This phenomenon could be in e p e ed as bidde s an icipa ing he hedge
unds’ educed sensi i i y o p emium inc eases due o he “backend” specula ion,
leading hem o o e a lowe p emium. Gi en he weake s a is ical signi icance
o ou indings on o e ou comes, we in e p e hem wi h cau ion, a ibu ing hem
o he specula ion o hedge unds ega ding highe compensa ion in he “backend”
ollowing he success ul comple ion o an o e .
Ou esul s sugges ha hedge unds possess ex ensi e ne wo ks and exploi
p i a e in o ma ion ega ding impending akeo e o e s. While Ge man akeo e
legisla ion does no oblige in es o s o disclose hei mo i a ions, we canno en i ely
exclude he possibili y ha his ou come may be pa ly a ibu able o hedge unds
s imula ing akeo e o e s h ough sha eholde ac i ism.
Ou s udy con ibu es o he exis ing li e a u e on akeo e likelihood p edic ion
and hedge unds’ engagemen in akeo e o e s. To he bes o ou knowledge,
we a e he i s o in es iga e he akeo e likelihood o publicly lis ed i ms in
Ge many. S udies on he Eu opean, US, and UK ma ke s include B a e al. (2009),
Dai e al. (2017), Danbol e al. (2016), espec i ely. Fu he mo e, we con ibu e o
he “channel” discou se on whe he hedge unds ha e supe io skills in iden i ying
p ospec i e akeo e a ge s, ade on p i a e in o ma ion (e.g., Dai e al. 2017;
Fich e al. 2019) o exhibi ac i is beha io , he eby s imula ing akeo e o e s
(e.g. G eenwood and Scho 2009,Boysone al.2017). Finally, we con ibu e o
he li e a u e by explo ing how hedge unds’ engagemen in akeo e o e s a ec s
he p ope ies, cha ac e is ics and ou come o he deal, in e ms o akeo e success
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 313
a es and o e p emiums (e.g., Dai e al. 2017; Co um and Le i 2019;Wuand
Chung 2022).
The emainde o he pape is o ganized as ollows. Sec ion 2 p o ides an
o e iew o he Ge man co po a e go e nance sys em and legal amewo k, as well
as he egula ion on inside ading. Sec ion 3 o e s a e iew o he li e a u e on
akeo e likelihood p edic ion and hedge und engagemen in akeo e o e s. Sec-
ion 4 p esen s he da a sample, a iable de ini ions and summa y s a is ics. Sec ion 5
p oceeds wi h he esul s o ou empi ical analysis and obus ness. Sec ion 6 con-
cludes he pape .
2 Ge man Co po a e Go e nance Sys em and Legal F amewo k
The Ge man co po a e go e nance sys em was cha ac e ized by he p ominen ole
o banks in inancing and moni o ing publicly lis ed co po a ions, a highly concen-
a ed owne ship s uc u e, a p onounced o ien a ion owa ds s akeholde s’ in e es s
wi h co-de e mina ion, and he ep esen a ion o a ious s akeholde g oups on he
supe iso y boa d (F anks and Maye 2001; Mie zne and Schweize 2014). Regu-
la o y changes, including he enac men o he Ge man Secu i ies Acquisi ion and
Takeo e Ac (Takeo e Ac o WpÜG), and modi ica ions o he co po a e ax law
in 2002, p omp ed a con e gence o he Ge man co po a e go e nance sys em o-
wa ds an Anglo-Saxon sha eholde -o ien ed model. The enac men o he Takeo e
Ac esul ed in an inc ease in akeo e ac i i y wi hin he Ge man ma ke . The mod-
i ica ions in co po a e ax legisla ion p omp ed banks o educe hei engagemen
in Ge man i ms, he eby c ea ing oppo uni ies o o eign capi al in es men s and
a di e si ica ion o owne ship s uc u es (Schmid 2004; Goe gen e al. 2008;We-
be 2009). Howe e , wi h uni e sal banks engaging less in he co po a e con ol o
Ge man publicly lis ed i ms, and he mo e dispe sed owne ship s uc u e leading
o lowe le els o sha eholde pa icipa ion, he Ge man co po a e go e nance ma -
ke expe ienced a con ol acuum, which a ac ed sha eholde ac i is s, speci ically
hedge unds, o s ep in and ob ain s akes in i ms wi h low le els o go e nance and
p o i abili y (Bessle e al. 2015).
The p ocess o acqui ing a Ge man publicly lis ed i m en ails speci ic egula ions
on disclosu e equi emen s o uphold ma ke anspa ency and enable in es o s o
acqui e all ele an in o ma ion on a speci ic s ock. The bidde mus publish he
decision o pu sue a akeo e ia an ad hoc news po al as soon as possible (§ 10 (1)
and (3) WpÜG). Ma e ial ma ke umo s ega ding a po en ial akeo e o e may
also obliga e he po en ial a ge company o dissemina e an ad hoc message aking
a posi ion. All pa ies in ol ed in he akeo e o e p ocess who possess p i a e
in o ma ion ha may conside ably in luence s ock p ices a e p ohibi ed om ading
in he a ge sha es in ques ion un il all ele an in o ma ion is published o capi al
ma ke pa icipan s (The Maye B own P ac ices 2022;BaFin2022). The Ge man
Takeo e Ac di e en ia es manda o y and olun a y o e s. A manda o y o e s is
ini ia ed by a sha eholde ( he bidde ) who su passes he 30% owne ship h eshold,
he eby acqui ing con ol o he a ge company acco ding o he Ge man Takeo e
Ac . These o e s may no be subjec o condi ions o becoming alid. In con as ,
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314 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
a olun a y akeo e o e p o ides mo e lexibili y, and can be subjec o condi ions
o become alid, such as minimum accep ance a e (§ 29 (2), and § 35 WpÜG).
These o e s a e o en used o expand con ol o e he a ge .
Wi h ega d o sha eholde ac i ism, Ge man legisla ion demands ha sha ehold-
e s disclose only limi ed in o ma ion ega ding hei in en ions, in con as o he
equi emen s s ipula ed unde US egula ions. Acco ding o he Risk Limi a ion
Ac o 2007, sha eholde s a e obliga ed o epo hei holdings and he in es men
pu pose he eo once hey su pass he 10% h eshold (§ 43 Secu i ies T ading Ac
WpHG). This implies a con e gence o Ge man egula ions owa ds hose in he US.
Howe e , unlike US egula ions unde Schedule 13D and 13G, Ge man in es o s
a e no equi ed o disclose hei in en ions o be ac i e o passi e (see Mie zne
e al. 2011; Webe and Zimme mann 2011; Bessle e al. 2015).
Finally, Ge man co po a e law plays a signi ican ole in akeo e s and ela ed
hedge und s a egies. The Ge man s ock co po a ion ac Ak G o e s a high le el o
legal p o ec ion o mino i y sha eholde s in a co po a e akeo e : i s ly, achie ing
a majo i y o sha es in a akeo e o e does no allow he majo i y sha eholde
o squeeze ou he emaining mino i y a a compensa ion equal o he o e p ice.
Secondly, owning he majo i y o sha es does no g an he in es o ull con ol o e
he a ge . In o de o exe cise ull con ol, a domina ion ag eemen mus be signed
be ween he co po a ion and he majo i y sha eholde , which i sel equi es a 75%
o e in a sha eholde mee ing (§ 293 Ak G). In such cases, mino i y sha eholde s a e
en i led o ecei e an adequa e compensa ion, i hey decide o elinquish hei sha es
o he majo i y sha eholde (§ 305 Ak G). Al e na i ely, i hey op o main ain hei
in es men in he company, hey a e en i led o ecei e a gua an eed di idend on
a ecu en basis (§ 304 Ak G). Comple e mino i y squeeze-ou s necessi a e a 90%
o 95% owne ship s ake o he majo i y sha eholde (§ 62 UmwG, § 327 Ak G). In all
cases, he compensa ion o mino i y sha eholde s who depa om he co po a ion is
subjec o a cou e i ica ion in an app aisal p oceeding, as ou lined in he Ge man
A bi a ion Ac (§ 2 Sp uch e ah ensgese z, Sp uchG). As a esul , a aining 100%
owne ship o he a ge is a long and in many cases cos ly p ocess. The ue cos o
acqui ing 100% o he sha es in a Ge man akeo e o e is in mos cases unknown,
as his would equi e he acking all s uc u al measu es and he co esponding
compensa ion o e s, including he po en ial inc ease in he cou p ocedu e. Ade s
e al. (2021) conduc ed a s udy on a sample o Ge man con ol aking akeo e o e s;
hey ound he pu e o e p emium o be on a e age 39%. Howe e , he combined
cos o o e p emium and e en ually inc eased compensa ion o a domina ion
ag eemen and a squeeze-ou o he sha es acqui ed a e he o e du ing he
“endgame” is mo e han 70%. Consequen ly, he exploi a ion o he s ong mino i y
p o ec ion and specula ion ega ding highe compensa ion a e a success ul o e has
become a p e alen in es men s a egy among hedge unds. A subs an ial numbe
o hedge unds en e he akeo e p ocess e en a e he o e announcemen has
been made (Dobmeie e al. 2020).
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 315
3 Li e a u e Re iew and Hypo heses De elopmen
3.1 Takeo e Likelihood P edic ion
3.1.1 Hedge Fund Engagemen
Palepu (1986) p o ided he seminal wo k o he ield o akeo e likelihood p edic-
ion. He iden i ied managemen ine iciency, unde alua ion o he i m, size as well
as a misma ch o i m g ow h and a ailable esou ces as key ac o s in p edic ing
akeo e likelihood. G eenwood and Scho (2009), Boyson e al. (2017), and Dai
e al. (2017) ha e iden i ied a co ela ion be ween a p e-o e hedge und s ake in
a i m and an inc eased likelihood o ha i m becoming a akeo e a ge . Howe e ,
he channel o e ec s emain he subjec o a deba e. Speci ically, he ques ion o
whe he hedge unds possess supe io ading skills, access o p i a e in o ma ion,
o s imula e akeo e s by beha ing ac i ely emains un esol ed.
Hedge unds ha ha e in es ed in po en ial akeo e a ge s can adop a passi e
o ac i is in es o ole, and in bo h cases hey bene i om he akeo e -induced
inc ease in a ge s ock p ices.1As passi e in es o s, hedge unds iden i y and in es
in i ms ha a e likely o become a ge s, ei he based on supe io ading skills
o p i a e in o ma ion. In con as , ac i is hedge unds aim o in luence co po a e
go e nance decisions and s imula e a akeo e o e by a ac ing a po en ial bidde .
The p esence o ac i is hedge unds has been shown o imp o e akeo e decisions
by educing poo ly pe o ming akeo e s, esul ing in a smalle numbe o akeo e s
and smalle deals (Wu and Chung 2022).
Supe io ading skills, buil on public in o ma ion such as inancial s a emen s,
indus y dynamics, and umo s/news in he media may enable hedge unds o gen-
e a e ading p o i s by in es ing in e en ual akeo e a ge s. While se e al s udies
ind ha akeo e a ge s possess simila cha ac e is ics o each o he as opposed
o i ms no subjec o akeo e a emp s, e.g., unde alua ion cap u ed by he ma -
ke - o-book alue, o managemen ine iciency cap u ed by a low e u n-on-equi y,
a b oad s and o he li e a u e a gues ha a ge p edic ion models su e om lim-
i ed p ecision and a e unable o gene a e ading p o i s based on hei p edic ions
(Palepu 1986;Powell2001;B a e al.2009; Danbol e al. 2016).
Daie al.(2017) p esen e idence o ading on subs an ial inside in o ma ion.2
Webe and Zimme mann (2011) analyze he disclosu e p ocess o hedge unds ac-
1Schwe zle and Uhlenkamp (2020) iden i ied akeo e announcemen e u ns o 10.0% and abno mal
e u ns including a 42 day p e-bid un-up pe iod o 23.6%. These esul s unde sco e he po en ial o
ading p o i s in a Ge man sample. Be on e al. (2014) and Bessle and Schneck (2015) epo simila
e u ns o samples om he US and Eu opean, espec i ely.
2Bodna uk e al. (2009) in es iga ed he in o ma ion leakage channel and ound ha inancial ad iso s as-
socia ed wi h in es men banks p ocess inside in o ma ion on upcoming akeo e o e s. Simila indings
we e epo ed by Low y e al. (2019) o he op ion ma ke . Hedge unds ading on p i a e in o ma ion is
also sugges ed by Massoud e al. (2011) in he lending ma ke , by Aga wal e al. (2013) in he con ex o
con iden ial holdings ha a e announced bela edly h ough addi ional egula o y ilings, and by Qian and
Zhong (2018) who p o ide e idence on in o ma ion leakage on IPO s ocks.
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316 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
qui ing s akes o 5% o mo e in Ge man publicly lis ed companies and come o
a simila esul .
The li e a u e ou lines se e al channels h ough which ac i is hedge unds migh
a ac a po en ial bidde and hence s imula e a akeo e o e . Ac i is hedge unds
may assume a ma ke ing ole by “pu ing i ms in o play” (G eenwood and Scho
2009,Boysone al.2017), o hey may se e o educe in o ma ion asymme ies
in akeo e o e s due o hei ole as in o med moni o s. They could lowe man-
age ial esis ance by h ea ening a p oxy con es , he eby inc easing he likelihood
o a akeo e o e (Co um and Le i 2019). Al e na i ely, hey could coun e ac
po en ial empi e building and o e paymen by bidde s (Wu and Chung 2022).
Ou p ima y hypo hesis is ha hedge und owne ship has a posi i e impac on
he p obabili y o a company ecei ing a akeo e o e (H1). We u ilize in o ma ion
ega ding he bidde and he in o ma ional en i onmen o he o e o di e en ia e
be ween po en ial explana ions o hypo hesis H1. Fi s , we spli ou da a sample
in o wo subsample, based on whe he he bidde is a inancial in es o o no .
This app oach is mo i a ed by he indings o Bodna uk e al. (2009)andDai
e al. (2017), who p o ide e idence ha hedge unds exhibi a highe deg ee o
in es men in deals wi h a heigh ened p obabili y o inside in o ma ion leakage.
They app oxima e he in o ma ion leakage p obabili y by he numbe o ad iso s
o he a ge , and he ex e nal unding sou ce, such as in es men banks, which
in ol es a la ge ne wo k o indi iduals wi h inside in o ma ion. In his s udy,
we app oxima e in o ma ion leakage by he ype o bidde . As p i a e equi y i ms,
compa ed o s a egis s, do no ha e a special law and M&A depa men , he numbe
o ad iso s and hus he p obabili y o in o ma ion leakage is highe compa ed o
s a egic bidde s. Signi ican di e ences in he impac o hedge und owne ship
be ween he wo subsamples a e in e p e ed as suppo o he hypo hesis o p i a e
in o ma ion (H2). In a second subsample, we exclude o e s ha in ol ed umo s
and/o ad hoc announcemen s o u he analyze he ole o in o ma ion leakage o
hedge und p e-o e owne ship (H3).
The ollowing hypo heses a e pos ula ed:
H1 A highe hedge und s ake p io o he o e is associa ed wi h a highe akeo e
likelihood.
H2 A highe hedge und s ake p io o he o e is associa ed wi h a highe akeo e
likelihood i he bidde is a inancial in es o .
H3 A highe hedge und s ake p io o he o e is associa ed wi h a highe akeo e
likelihood when excluding deals ha a e ela ed o ma ke umo s/news.
H4 Hedge und ading pa e ns a e supe io in iden i ying a ge s. The success
a e o akeo e p edic ions inc eases wi h he in he hedge und’s p e-o e -s ake in
he a ge .
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 323
Table 1 Summa y S a is ics
Va iable NMean S.D. Q1 Median Q3
Owne ship cha ac e is ics
Hedge und s ake 5068 0.011 0.032 0.000 0.000 0.007
Ins i u ional s ake 5068 0.178 0.177 0.030 0.125 0.272
S a egic s ake 5068 0.214 0.292 0.000 0.045 0.350
Indi idual s ake 5068 0.175 0.236 0.000 0.030 0.327
Fo eign s ake 5068 0.194 0.229 0.004 0.111 0.296
Index unds s ake 5068 0.013 0.028 0.000 0.000 0.011
Fi m-speci ic cha ac e is ics
Fi m size: To al asse s 5068 12.56 2.42 10.90 12.23 14.10
Ine icien mgm : Re u n on Equi y 5068 0.042 0.231 0.003 0.088 0.159
G ow h esou ce imbalance dummy 5068 0.249 0.433 0 0 0
Unde alua ion: Ma ke o book
a io
5068 0.001 0.001 0.000 0.001 0.001
Le e age 5068 0.189 0.166 0.035 0.163 0.297
Liquidi y 5068 0.317 0.228 0.137 0.262 0.460
Momen um: S ock p ice momen um 5068 0.113 0.470 –0.175 0.048 0.323
Momen um: T ading olume 5068 1.193 4.694 0.013 0.089 0.559
Indus y-speci ic cha ac e is ics
Indus y dis u bance dummy 5068 0.194 0.395 0 0 0
Indus y concen a ion 5068 1,746 2.164 365 767 2.252
Mac o-speci ic cha ac e is ics
Ma ke sen imen 5068 0.790 0.399 1 1 1
Bidde cha ac e is ics
Toehold 260 0.462 0.289 0.272 0.455 0.736
Toehold acquisi ion 260 0.212 0.409 0 0 0
La ges sha eholde 260 0.604 0.490 0 1 1
Financial in es o 260 0.492 0.501 0 0 1
Fo eign 260 0.465 0.500 0 0 1
Same indus y 260 0.435 0.497 0 0 1
Deal cha ac e is ics
Success a e 260 0.377 0.313 0.086 0.308 0.652
O e p emium 260 0.195 0.285 0.000 0.105 0.296
Rumo 260 0.085 0.279 0 0 0
Ad hoc 260 0.077 0.267 0 0 0
Cash o e 260 0.923 0.267 1 1 1
Hos ile 260 0.196 0.398 0 0 0
Compe ing o e 260 0.019 0.138 0 0 0
Mul iple ounds 260 0.154 0.361 0 0 0
Manda o y o e 260 0.215 0.412 0 0 0
Minimum accep . a e 260 0.188 0.300 0 0 1
C isis 260 0.254 0.436 0 0 1
Va iables a e de ined in Table 12
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324 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
pe iod.11 In ou sample, he a e age success a e is 37.7%. Fu he mo e, bidde s o e
a p emium o on a e age 19.5% on he h ee-mon hs weigh ed a e age s ock p ice
(VWAP), cons i u ing he minimum o e p ice acco ding o Ge man egula ion (§ 5
(1) WpÜGAV).
5Resul s
5.1 Takeo e Likelihood P edic ion
5.1.1 Me hodology
In he i s pa o ou analyses, we examine he ela ion be ween a company’s
sha eholde s uc u e and i s likelihood o become a ge o a akeo e o e . Ou
ocus is on he hedge und s ake. In a i s s ep, we examine di e ences be ween
a ge i ms and con ol i ms wi hin he da a sample, based on mean di e ence
es ing, Pea son and Spea man co ela ions and a iance in la ion ac o s.
We apply he ollowing binominal logi eg ession model, as p oposed in he
ex an li e a u e (Palepu 1986; Amb ose and Megginson 1992;B a e al.2009;
Danbol e al. 2016; Dai e al. 2017; Tunyi e al. 2019):
P ob . a ge i D1/ D˛Cˆowne ship
i; 1ˇCˆcon ols
i; 1C"i (1)
The dependen a iable a ge i akes he alue o one i a company (i) ecei es
a akeo e o e in a pe iod ( ), and equals ze o o he wise. The model compu es
each company’s likelihood o being subjec o a akeo e o e in pe iod ( ) condi-
ional upon i s owne ship cha ac e is ics and o he obse ed cha ac e is ics in he
p eceding pe iod. Con ol a iables comp ise i m-, indus y- and mac o-speci ic
cha ac e is ics; hei impac on akeo e likelihood has been documen ed in he ex-
an li e a u e. These con ol a iables a e compu ed on a yea -end basis p io o he
o e announcemen .
In o de o con ol o a po en ial look-ahead bias, we lag all independen a i-
ables by one pe iod. Fu he mo e, he June app oach o accoun ing da a is adop ed
o main ain app op ia e lags in he model (Soa es and S a k 2009). This app oach
accoun s o he ac ha mos companies publish hei inancial and balance shee
in o ma ion wi h a delay o up o hal a yea o he Decembe yea -end. Conse-
quen ly, i a akeo e o e is announced in he i s hal o he yea (e.g., June 2020),
only hei inancial da a om he p e ious inancial yea -end a e publicly a ailable
( om Decembe 2018), which se es bidde s as a base o hei acquisi ion decision.
This app oach also add esses e e se causali y, a po en ial endogenei y issue.
Ou analyses migh be p one o omi ed a iable bias, a u he po en ial sou ce
o endogenei y. To add ess his conce n, we include a comp ehensi e se o con ol
11 The discussion o he legal Ge man peculia i ies ha e he consequence ha “success” canno be ade-
qua ely measu ed by he bidde success ully acqui ing enough sha es o ha e he majo i y o o es. Ac u-
ally, some o e s in ou sample a e made by a bidde al eady owning he majo i y o he sha es.
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 325
a iables de i ed om p io esea ch, and include indus y and yea ixed e ec s o
con ol o ime-in a ian unobse ed he e ogenei y.
To assess he model’s capabili y o p edic akeo e a ge s, he sample is spli
in o a aining and a hold-ou sample. The las wo yea s o he panel da a se ,
comp ising o i m-yea obse a ions om 2019 and 2020 (16% o all i m-yea
obse a ions), a e alloca ed o he hold-ou sample (e.g., Espahbodi and Espahbodi
2003). The objec i e is o app oxima e a eal-li e se ing o in es iga ing u u e
a ge s as closely as possible. We un ou mul i a ia e analyses on he aining
sample o mi iga e bias and possible o e i ing, al hough a he po en ial cos o
es ima ion accu acy.12
The ex an li e a u e indica es ha akeo e a ge s di e subs an ially om non-
a ge i ms, e.g., in e ms o i m size and unde alua ion. In o de o d aw conclu-
sions on a i m’s akeo e likelihood, we apply di e en ma ching p ocedu es and
pe o m ou eg ession analyses based on ma ched i m-yea obse a ions. Ma ching
allows us o in es iga e he hedge und s ake in ea men i ms ( akeo e a ge ),
compa ed o he hedge und s ake in he ma ched con ol i ms (simila i ms and
hence po en ial a ge s). Fi s , we employ mul i a ia e dis ance ma ching on he en
nea es neighbo s on he yea o o e announcemen and i m size (and la e also on
he deg ee o unde alua ion) (see o example B a e al. 2009). Second, p opensi y
sco e ma ching is employed on all co a ia es and exac ma ching is pe o med on
yea and indus y on he en nea es neighbo s (and la e applying adius calipe ).
P opensi y sco e ma ching is implemen ed by i s execu ing a logi eg ession model
on he akeo e p obabili y ( e e o Eq. 1), which o e s insigh s on he undamen al
i m cha ac e is ics associa ed wi h an inc eased h ea o a akeo e o e wi hin ou
sample. Second, each i m’s p obabili y (p opensi y sco e) o ecei ing a akeo e
o e in he nex pe iod is compu ed. Thi d, a ge and con ol i ms a e ma ched ex-
ac ly on yea and indus y (based on he wo-digi s anda d indus y classi ica ion).
We calcula e mean di e ences in con ol a iables be ween ac ual and po en ial
a ge i ms o con ol o he quali y o ou ma ching p ocedu e, and es whe he
i leads o su icien ly balanced samples. Finally, we selec obse a ions ha a e
success ully ma ched o be included in ou eg ession analyses (see o example Dai
e al. 2017; Tunyi 2019).
5.1.2 Uni a ia e Resul s
The s udy aims o examine whe he ac ual a ge s and po en ial a ge s (con ol
i ms) di e s uc u ally by es ing mean di e ences, analyzing Pea son and Spea -
man co ela ions and a iance in la ion ac o s. Table 2p esen s mean alues o i m
cha ac e is ics conside ed o be associa ed wi h a i m’s akeo e likelihood. The
da a sample comp ises 260 a ge i m-yea s and 4808 con ol i m-yea s (comple e
unma ched sample). The able also epo s he p- alues o - es s o he mean di e -
ences. Fi m cha ac e is ics a e compu ed yea -end p io o he o e announcemen .
12 Ano he echnique o cons uc he hold-ou sample is based on na u al p opo ions o akeo e ac i i y
pe yea (Palepu, 1986;B a e al.,2009).
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326 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 2 Uni a ia e Analyses—Mean Di e ence Tes ing
Va iable Mean a ge s Mean non- a ge s Mean di e ence
Owne ship cha ac e is ics
Hedge und s ake 0.021 0.011 0.010***
Ins i u ional s ake 0.175 0.178 –0.002
S a egic s ake 0.178 0.216 –0.038**
Indi idual s ake 0.087 0.180 –0.093**
Fo eign s ake 0.181 0.194 –0.014
Index unds s ake 0.009 0.014 –0.005***
Fi m speci ic cha ac e is ics
Fi m size: To al asse s 12.449 12.569 –0.120
Ine icien mgm : Re u n on Equi y 0.032 0.042 –0.010***
G ow h esou ce imbalance dummy 0.281 0.248 0.033
Unde alua ion: Ma ke o book a io 0.904 1.063 –0.159***
Le e age 0.223 0.187 0.035***
Liquidi y 0.285 0.318 –0.033**
Momen um: S ock p ice momen um 0.103 0.114 –0.011
Momen um: T ading olume 1.204 1.192 0.012
Indus y-speci ic cha ac e is ics
Indus y dis u bance dummy 0.242 0.191 0.051
Indus y concen a ion 1.919 1.736 182
Mac o-speci ic cha ac e is ics
Ma ke sen imen 0.783 0.790 –0.007
Va iable de ini ions a e in Table 12
Mean di e ences o a ge s and non- a ge s a e displayed in he las column
***, **, and * ep esen s a is ical signi icance a he 1, 5, and 10% le el, espec i ely
We ind ha a ge s exhibi a signi ican ly di e gen owne ship s uc u e compa ed
o con ol i ms. They exhibi a highe hedge und s ake (mean di e ence o +1.0%)
and a lowe index und s ake (mean di e ence o –0.05%) a yea -end be o e he o e
announcemen (bo h signi ican a he 1% le el). Fu he mo e, a ge i ms exhibi
a signi ican ly lowe sha e o s a egic and ins i u ional sha eholde s (signi ican a
he 5% and 1% le el, espec i ely), and a lowe le el o ins i u ional sha eholde s
ela i e o con ol i ms ( hough s a is ically insigni ican , aligning wi h Amb ose and
Megginson 1992). Conce ning i m-speci ic cha ac e is ics, a ge i ms a e a he
ine icien ly managed, as illus a ed by a lowe e u n on equi y. Fu he mo e, a ge
i ms exhibi a lowe alua ion le el, as measu ed by he ma ke - o-book a io, and
a highe le e age a io (bo h signi ican a he 1%). These ou comes align wi h he
obse a ions epo ed by B a e al. (2009) and Danbol e al. (2016).
In summa y, based on ou p- alues, a ge and con ol i ms exhibi dis inc s uc-
u al di e ences in e ms o owne ship cha ac e is ics and selec ed i m-speci ic a i-
ables. Howe e , we do no iden i y signi ican di e ences in indus y- and mac o-
speci ic cha ac e is ics be ween a ge and non- a ge i m-yea s in he da a sample
as measu ed by uni a ia e analysis.
Pea son co ela ion coe icien s and a iance in la ion ac o s we e es ima ed,
e ealing a modes co ela ion be ween he a iables as indica ed by he Pea son
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 327
co ela ion ma ix (below he 0.7 h eshold sugges ed by Do mann e al. 2013)and
low a iance in la ion ac o s (below he3 h eshold acco ding o Hai e al. 2019).
We conclude ha mul icollinea i y conce ns wi hin ou da ase a e unlikely. The
esul s o his analysis a e a ailable on eques .
5.1.3 Takeo e Likelihood Es ima ion
In o de o es ou p ima y hypo heses conce ning he ela ionship be ween a com-
pany’s sha eholde s uc u e and i s akeo e likelihood, we es ima e a a ie y o
logis ic eg ession models, as speci ied in Eq. 1.Table3p esen s he coe icien s and
p- alues o he logis ic eg essions o i e dis inc models, based on he unde lying
ma ching p ocedu e. Model 1 ep esen s he baseline eg ession wi hou ma ching,
meaning ha all a ge and con ol i ms in ou sample a e included in he eg ession
model. Model 2 includes only hose i ms ha a e ma ched ia mul i a ia e dis ance
ma ching on he en nea es neighbo s on he yea o o e announcemen and i m
size. In model 3, ma chings a e based addi ionally on he le el o unde alua ion
app oxima ed by he ma ke - o-book a io. Va iables ha en e he ma ching p oce-
du e a e excluded as ep esso s in he espec i e models. Model 4 builds on a ge
and con ol i ms ha a e p opensi y sco e ma ched on yea and indus y ( wo-digi
s anda d indus y classi ica ion code) on he en nea es neighbo s o 0.25 calipe .
In model 5, ma chings a e based on adius calipe o 0.25.
The quali y o he ma ching p ocedu e is con olled o by compu ing he di e -
ences in ou a iables o in e es and con ol a iables ha a e ma ched and hence
en e he eg ession analysis. The esul s indica e ha he ma ched sample exhibi s
educed mean di e ences compa ed o he unma ched sample. O e all, ou ma ching
p ocedu es, including mul i a ia e dis ance ma ching and p opensi y sco e ma ch-
ing, esul in a signi ican educ ion in he mean bias om he unma ched o he
ma ched sample. These esul s a e a ailable upon eques .
The es ima ion esul s epo ed in Table 3suppo ou hypo heses H1, which
posi s a highe hedge und s ake is associa ed wi h a highe ake-o e likelihood,
and H5, which posi s ha a highe s ake o index unds implies a lowe h ea o
a akeo e o e (wi h he excep ion o model 3). Fu he mo e, a highe s a egic
s ake educes he akeo e likelihood. The sign o his coe icien is consis en wi h
he expec a ion ha his in es o g oup, cha ac e ized by i s long- e m in e es in
he a ge company, may ac as a de e en o po en ial bidde s. The impac o
ins i u ional in es o s is no signi ican . This indings align wi h he inconclusi e
empi ical esul s ega ding hei ole, which sugges s ha ins i u ional in es o s
may ei he unc ion as a delega ed moni o in he capi al ma ke due o hei supe io
in o ma ion acquisi ion and analysis capabili ies, o as a passi e in es o , a ole ha
can be de imen al o co po a e go e nance (see e.g., Jensen 1993; Bebchuk and
His 2019; Hea h e al. 2022).13 Fu he mo e, indi idual s akes a e shown o exe
a nega i e impac on akeo e likelihood, which may be a ibu ed o hei capaci y
13 Kim e al. (2024) examine he ole o engagemen cos s as a cause o inconclusi e ou comes. They
demons a e ha o a speci ic ca ego y o o e s (s ock- o -s ock bids), he p opo ion o ins i u ional
owne ship inc eases he likelihood o ecei ing a bid.
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328 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 3 Takeo e Likelihood Es ima ion
Dependen a iable: P obabili y o becoming a a ge
Baseline,
unma ched
Mul i a ia e dis ance
ma ching
P opensi y sco e ma ching
(1) (2) (3) (4) (5)
Hedge und s ake 0.176
(0.197)
1.067*
(0.075)
1.867**
(0.018)
1.176***
(0.007)
0.469**
(0.015)
Ins i u ional s ake –0.056*
(0.076)
–0.247
(0.112)
–0.166
(0.284)
–0.131
(0.153)
–0.077
(0.172)
S a egic s ake –0.084***
(0.000)
–0.527***
(0.000)
–0.342***
(0.000)
–0.228***
(0.000)
–0.129***
(0.000)
Indi idual s ake –0.173***
(0.000)
–0.857***
(0.000)
–0.612***
(0.000)
–0.376***
(0.000)
–0.275***
(0.000)
Fo eign s ake 0.016
(0.466)
–0.054
(0.631)
0.037
(0.732)
–0.002
(0.978)
0.000
(0.991)
Index unds s ake –0.743***
(0.004)
–2.348**
(0.024)
–1.903
(0.197)
–2.313***
(0.004)
–1.148**
(0.013)
Fi m size: To al asse s 0.001
(0.735)
––0.009
(0.166)
0.003
(0.454)
Ine icien mgm :
Re u n on Equi y
0.001
(0.977)
–0.066
(0.502)
0.152
(0.16)
–0.035
(0.501)
–0.017
(0.594)
G ow h esou ce im-
balance dummy
0.010
(0.205)
–0.034
(0.453)
–0.033
(0.543)
0.038
(0.137)
0.014
(0.367)
Unde alua ion: Ma -
ke - o-book Ra io
–5.901
(0.288)
–40.877
(0.135)
– –15.091
(0.365)
–9.263
(0.359)
Le e age 0.002
(0.942)
–0.118
(0.509)
–0.104
(0.513)
–0.031
(0.701)
–0.018
(0.717)
Liquidi y –0.041**
(0.028)
–0.214*
(0.051)
–0.271**
(0.047)
–0.139**
(0.017)
–0.074**
(0.029)
Momen um: S ock
p ice momen um
0.003
(0.753)
0.034
(0.564)
0.005
(0.938)
0.002
(0.935)
0.005
(0.765)
Momen um: T ading
olume
–0.002*
(0.084)
–0.005
(0.308)
–0.013
(0.138)
–0.004
(0.184)
–0.003
(0.145)
Indus y dis u bance
dummy
–0.003
(0.784)
0.0420
(0.399)
0.000
(0.995)
0.014
(0.634)
0.009
(0.603)
Indus y concen a ion 0.000
(0.226)
0.000
(0.131)
0.000
(0.966)
0.000
(0.558)
0.000
(0.565)
Ma ke sen imen 0.028
(0.902)
–2.145**
(0.038)
–3.452**
(0.016)
–0.176
(0.82)
0.240
(0.607)
Indus y FE Yes Yes Yes Yes Yes
Yea FE Yes Yes Yes Yes Yes
Cons an Yes Yes Yes Yes Yes
Pseudo R-squa e 0.136 0.221 0.187 0.095 0.158
N 4014 1688 924 1203 2016
The sample size depends on he ma ching p ocedu e applied
All a iables a e de ined in Table 12
S anda d e o s a e clus e ed by i m and yea . P- ales a e epo ed in pa en heses
***, **, and * ep esen s a is ical signi icance a he 1, 5, and 10% le el, espec i ely
K
Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 329
o ac as a de e en o po en ial bidde s. The impac o o eign s akes, howe e , is
no signi ican , as he ex an heo e ical amewo ks do no pe mi any p edic ions
ega ding he sign.
O e all, we ind mainly he owne ship s uc u e as a p edic o o akeo e deals.
Con en ional publicly obse able inancial, balance shee and ma ke in o ma ion,
such as he e u n on equi y o he ma ke o book a io, appea o no p o ide
subs an ial in o ma ion which i m is becoming a akeo e a ge and hence an in e -
es ing in es men oppo uni y. This obse a ion sugges s ha hedge unds possess
p i a e in o ma ion ega ding impending akeo e o e s ha guides hei ading
decisions (in line wi h Dai e al. 2017).
In all models, he only con ol a iable wi h a signi ican and nega i e impac
on he likelihood o a akeo e o e is he a ge ’s holdings o liquid asse s. One
possible explana ion o his inding lies in he s ingen equi emen s imposed by
he Ge man S ock Co po a ion Ac (Ak G) on using he a ge ’s cash holdings o
inance he pu chase p ice. Fo ins ance, a domina ion ag eemen , which pe mi s
limi ed access o hese unds, equi es a sha eholde o e wi h a 75% app o al
h eshold. Consequen ly, subs an ial cash holdings in he a ge company a e o en
pe cei ed as a po en ial de e en o akeo e o e s, as hey could be u ilized o
de ensi e measu es, such as sha e buybacks.
While he indings p o ide suppo o hypo hesis H1, he cu en analysis is no
ye capable o dis inguishing be ween wo compe ing explana ions. These expla-
na ions include he possibili y ha hedge unds a e exploi ing p i a e in o ma ion,
o ha hey a e s imula ing akeo e o e s due o sha eholde ac i ism. To u he
e ine ou analysis, we spli ou sample and conduc an addi ional analysis, his ime
ocusing on bids which ei he include o exclude inancial in es o s. Following he
discussion in Sec . 3.1.1., we hypo hesize ha hese o e s a e subjec o a highe o
lowe in o ma ion leakage and, as a esul , should be expec ed o exe a s onge
o weake impac by hedge unds on he akeo e p obabili y. Table 4p esen s he
esul s o he p obabili y o becoming a akeo e a ge , based on i m-yea obse -
a ions selec ed h ough p opensi y sco e ma ching. Model 1 and 2 a e based on
a subsample o deals whe e he bidde is a inancial in es o . Con e sely, in model 3
and 4 he bidde is no a inancial in es o . The esul s align wi h he easoning
ou lined abo e and suppo ou second hypo hesis. The indings indica e a mo e
p onounced associa ion o he hedge und s ake p io o he o e and he h ea o
a akeo e o e o model 1 and 2, when he bidde is a inancial in es o , in e ms
o bo h ele ance and signi icance. Con e sely, when he bidde is no a inancial
in es o , his ela ion becomes insigni ican . This inding lends u he c edence o
he a gumen ha hedge unds bene i om p i a e in o ma ion by main aining close
connec ions wi h ad iso s o he a ge o inside s in ol ed in he inancing o he
deal.
Second, we in es iga e whe he we would ob ain quali a i ely simila esul s by
excluding deals ha a e associa ed wi h umo s in he news/media o deals wi h
ad hocs dissemina ed by he a ge o bidde i m on a possible upcoming akeo e
p io o he o e announcemen (as mo i a ed by Dai e al. 2017). These da a poin s
a e hand collec ed om Ba in o e documen s and ia comp ehensi e news/media
esea ch. The esul s a e p esen ed in model 5 (excluding deals wi h umo s) and 6
K
330 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 4 Takeo e Likelihood Es ima ion—Subsample Analyses
Dependen a iable: P obabili y o becoming a a ge
Subsample: Deals wi h bidde being a inancial in-
es o (excl. in model 3 and 4)
Subsample: Excl. deals
wi h umo s/ad hocs
(1) (2) (3) (4) (5) (6)
Hedge und
s ake
1.499***
(0.000)
0.513***
(0.005)
0.334
(0.255)
–0.018
(0.906)
0.976***
(0.005)
0.432**
(0.013)
Ins i u ional
s ake
–0.230**
(0.047)
–0.091
(0.151)
–0.125
(0.255)
–0.069
(0.287)
–0.128
(0.186)
–0.060
(0.272)
S a egic s ake –0.168**
(0.019)
–0.068*
(0.051)
–0.313***
(0.000)
–0.180***
(0.000)
–0.243***
(0.000)
–0.130***
(0.000)
Indi idual s ake –0.314***
(0.002)
–0.176***
(0.000)
–0.443***
(0.000)
–0.286***
(0.000)
–0.383***
(0.000)
–0.240***
(0.000)
Fo eign s ake 0.118
(0.119)
0.048
(0.21)
–0.069
(0.449)
–0.037
(0.495)
–0.016
(0.824)
–0.011
(0.791)
Index unds
s ake
–1.969*
(0.093)
–0.839
(0.154)
–2.664***
(0.005)
–1.398***
(0.006)
–4.079***
(0.004)
–2.152***
(0.002)
Fi m size: To al
asse s
0.002
(0.812)
0.000
(0.937)
0.018**
(0.025)
0.007
(0.105)
0.005
(0.453)
0.000
(0.999)
Ine icien
mgm : Re u n
on Equi y
–0.074
(0.257)
–0.042
(0.212)
0.017
(0.8)
0.023
(0.565)
0.009
(0.859)
0.007
(0.82)
G ow h e-
sou ce imbal-
ance dummy
0.059*
(0.065)
0.025
(0.154)
0.007
(0.839)
0.003
(0.849)
0.031
(0.215)
0.014
(0.339)
Unde alua ion:
Ma ke - o-book
Ra io
–22.626
(0.293)
–12.063
(0.299)
–1.390
(0.946)
–3.837
(0.741)
–6.227
(0.718)
–5.132
(0.608)
Le e age –0.128
(0.262)
–0.077
(0.182)
0.044
(0.662)
0.032
(0.561)
–0.011
(0.899)
–0.009
(0.864)
Liquidi y –0.179**
(0.015)
–0.078**
(0.036)
–0.079
(0.333)
–0.052
(0.236)
–0.149**
(0.018)
–0.076**
(0.023)
Momen um:
S ock p ice
momen um
0.010
(0.776)
0.001
(0.951)
0.014
(0.632)
0.009
(0.597)
–0.009
(0.74)
–0.005
(0.729)
Momen um:
T ading olume
–0.006
(0.243)
–0.003
(0.204)
–0.002
(0.559)
–0.001
(0.521)
–0.004
(0.147)
–0.002
(0.152)
Indus y dis u -
bance dummy
0.012
(0.763)
0.010
(0.644)
0.048
(0.192)
0.023
(0.233)
0.032
(0.313)
0.015
(0.406)
Indus y concen-
a ion
0.000
(0.135)
0.000
(0.147)
0.000
(0.231)
0.000
(0.31)
0.000
(0.438)
0.000
(0.429)
Ma ke sen i-
men
0.643
(0.607)
0.384
(0.558)
–0.770
(0.395)
–0.218
(0.665)
–0.171
(0.855)
0.327
(0.551)
Indus y FE Yes Yes Yes Yes Yes Yes
Yea FE Yes Yes Yes Yes Yes Yes
Cons an Yes Yes Yes Yes Yes Yes
Pseudo R-squa e 0.120 0.184 0.120 0.201 0.118 0.193
N 661 1282 711 1290 1072 1887
The sample size depends on he ma ching p ocedu e applied. All a iables a e de ined in Table 12
P- alues a e epo ed in pa en heses. ***, **, and * ep esen s a is ical signi icance a he 1, 5, and 10%
le el, espec i ely
K
Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 331
(excluding deals wi h ad hocs) in Table 4; hey suppo ou hi d hypo hesis. The
indings indica e ha a highe hedge und s ake signi ican ly inc eases he p obabili y
o a subsequen akeo e o e , e en when excluding deals whe e he o e all ma ke
an icipa es a akeo e o e . The asse ion ha umo s and ad hocs should also cap u e
hedge und ac i ism o some ex en ein o ces he no ion ha p i a e in o ma ion is
highly ele an o hedge unds ading in po en ial a ge companies.
5.1.4 Model P edic ion Abili y
In his sec ion, we seek o asce ain whe he ou likelihood models, which a e based
on di e en ma ching p ocedu es, yield mo e p ecise and accu a e u u e akeo e
a ge p edic ions han he baseline model and a andom selec ion o po en ial a ge s
om he popula ion. Ou p ima y in e es lies in de e mining whe he hedge unds’
ading pa e ns a e p o i able in he sense ha hedge unds achie e a highe le el
o co ec akeo e a ge p edic ions and a lowe le el o alse p edic ions in i ms
in which hey a e hea ily in es ed. Fi s , we es ima e he cu -o p obabili y in he
aining sample o classi y i ms as likely akeo e a ge s. Subsequen ly, we apply
his cu -o p obabili y o he hold-ou sample o assess he p edic i e capabili y o
ou models. Finally, we in es iga e whe he a ge s wi h a high s ake o hedge und
in es men (e.g., based on he uppe e cile o hedge und in es men ) a e associa ed
wi h highe p edic ion benchma ks.
To de i e he op imal p obabili y h eshold, a ade-o be ween ype I e o (no
iden i ying a a ge i m) and ype II e o (classi ying a con ol i m as a a ge i m)
mus be balanced. Fi s , we align wi h Palepu (1986) in sugges ing he minimiza ion
o o al misclassi ica ions. We de i e he cu o by iden i ying he in e sec ion o
he p obabili y densi y cu es o a ge i ms and non- a ge i ms (a me hod also
employed by Espahbodi and Espahbodi 2003). Subsequen ly, we implemen he
me hodology sugges ed by R. Powell (2004), which in ol es maximizing he p o-
po ion o a ge i ms in he po olio o o mula e a p o i able ading s a egy. I is
no ewo hy ha ype I e o s a e associa ed wi h highe oppo uni y cos compa ed o
ype II e o s. The p obabili y h eshold is de i ed by di iding he p edic ed a ge s
in o en equal-sized po olios based on hei akeo e p obabili y and iden i ying
he po olio wi h he highes concen a ion a io (sha e o ac ual a ge s o o al
i ms). Danbol e al. (2016) ecommend selec ing he uppe wo deciles, i.e., he
20% o i ms wi h he highes akeo e likelihood, o en e he in es men po olio.
The ou o sample p edic ion esul s a e p esen ed in Table 5, while he acquisi ion
p obabili y dis ibu ion is illus a ed in Table 15 in he appendix. The hold-ou sample
consis s o all i m-yea obse a ions om 2019 and 2020, which app oxima e a eal-
li e se ing o in es ing in u u e a ge s. This esul s in a o al o 795 obse a ions
in he hold-ou sample, including 34 a ge s and 761 non- a ge i ms. The cu -
o p obabili ies ange om a low o 6.1% in model 1 o a high o 53.0% in
model 3. TP (TN) s ands o ue posi i e ( ue nega i e) classi ica ions, i.e., he
co ec p edic ion o a ge s (TP) and non- a ge s (TN). Simila ly, FP (FN) deno es
alse posi i e ( alse nega i e) classi ica ions, ep esen ing ype-I e o (FN) and ype-
II-e o (FP), espec i ely. Ou s udy examines h ee dis inc p edic ion benchma ks:
p ecision is he numbe o co ec ly p edic ed a ge s ela i e o he o al numbe o
K
332 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 5 Ou -o -sample P edic ion Tes Resul s
P edic i e powe o akeo e likelihood models
Baseline, un-
ma ched (in %)
Mul i a ia e dis ance ma ching
(in %)
P opensi y sco e ma ching
(in %)
(1) (2) (3) (4) (5)
Cu -o p ob-
abili y
6.1 34.7 53.0 19.9 11.8
P ecision 5.7 4.8 5.1 4.4 4.1
Recall 19.4 71.9 59.4 52.9 20.6
Accu acy 83.2 38.2 47.7 49.3 76.0
This able p esen s he esul s om he p edic ion es s o he hold ou sample
The cu -o p obabili y is de e mined as he in e sec ion o he a ge and non- a ge p obabili y densi y
cu es
The epo ed benchma ks a e p ecision TP / (TP+ FP), ecall TP / (TP+ FN) and accu acy (TP+ TN) /
(TP+TF+FP+FN)
Table 6 Ou o Sample P edic ion Tes Resul s—In es ing in o la ges wo Deciles o Takeo e
P obabili y
P edic i e powe o akeo e likelihood models
Baseline, un-
ma ched (in %)
Mul i a ia e dis ance ma ching
(in %)
P opensi y sco e ma ching
(in %)
(1) (2) (3) (4) (5)
Cu -o p ob-
abili y
7.7 67.6 71.6 25.5 15.4
P ecision 6.8 4.8 5.4 4.1 2.5
Recall 16.1 59.4 59.4 38.2 8.8
Accu acy 87.2 47.7 50.3 59.5 81.4
p edic ed a ge s, e lec ing ype-II e o . Recall is he numbe o co ec ly p edic ed
a ge s ela i e o he numbe o ac ual a ge s, e lec ing ype-1 e o . Accu acy is
he o al numbe o co ec p edic ions ela i e o he o al numbe o i ms. Highe
ecall alues deno e lowe oppo uni y cos s. Fo ins ance, model 5 co ec ly p edic s
se en a ge i ms ( ue posi i e), bu ails o iden i y 27 ue a ge s o in es in ( alse
nega i e), esul ing in a ecall o only 20.6%.
The simple baseline model 1 demons a es supe io p ecision and accu acy com-
pa ed o models 2–5, while he mo e ad anced models 2–5 exhibi highe ecall
pe o mance. The ecall analysis indica es ha model 2 minimizes he oppo uni y
cos o no iden i ying a a ge i m among he models p esen ed, while model 1 ex-
hibi s he highes oppo uni y cos (71.9% s. 19.4%, espec i ely). No ably, model 5
does no ou pe o m a andom selec ion o i ms o in es men om he hold ou
sample, wi h a p ecision o 4.1% compa ed o a sha e o 4.3% o a ge s in he hold-
ou sample.
In acco dance wi h Danbol e al. (2016), Table 6p esen s he p edic ion esul s
o in es men in he 20% o i ms wi h he highes p edic ed akeo e likelihoods.
The dis ibu ion o ac ual a ge s and non- a ge s o models 5 and model 1 is illus-
a ed in Tables 13,14 and 15 in he appendix. The highes concen a ion a ios a e
achie ed in he inal decile, as p e iously epo ed by B a e al. (2009), hough no
K
Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 339
akeo e o e p emiums, sugges ing he po en ial o ading on p i a e in o ma ion.
Con e sely, Wu and Chung (2022) posi ha ac i is hedge unds’ a bene icial ole
in akeo e s. Thei analysis indica es ha ac i is hedge unds can enhance akeo e
decisions, leading o a educ ion in he equency o akeo e s and smalle deals.
In ligh o hese indings, we ha e conduc ed an OLS (o dina y leas squa es)
eg ession analysis in acco dance wi h ollowing econome ic speci ica ion o es
ou hypo hesis:
O e P emiumij D˛CˆOwne ship in
ij ˇCˆCon ols
ij Cı1.c isis/Cı2. umo /
Cı3.adhoc/ CjC"ij
(3)
Indi idual a ge companies/ akeo e o e s a e deno ed by i, while jcap u es a -
ge indus ies and εij is a esidual e o e m. The dependen a iable, o e p emium,
is de ined as he o e p ice pe sha e on he h ee mon h olume-weigh ed a e age
a ge s ock p ice. The eg ession model is cons uc ed analogously o Eq. 2in he
p e ious sec ion.
The esul s a e p esen ed in Table 10. Fo model 1, owne ship cha ac e is ics a e
compu ed one mon h p io o he o e announcemen ( h ee and six mon hs o
models 2 and 3, espec i ely).
The indings do no suppo hypo hesis H9, which posi s a posi i e ela ionship
be ween hedge und s ake and p emium o e ed. Ins ead, a nega i e ela ionship is
obse ed, hough i is only weakly signi ican in models 1 and 2 and insigni ican
in model 3. This inding is in e p e ed in ligh o he po en ial “backend” s a egy
o hedge unds: being awa e o his s a egy, bidde migh o e educed p emiums
a ele a ed hedge und s akes, an icipa ing (pa ial) suppo o he o e om hedge
unds specula ing on an inc ease o he compensa ion a e he comple ion o he
akeo e . Howe e , gi en he only weak signi icance o his inding, his in e p e a-
ion should be ea ed wi h some ca e.
I is no ewo hy ha only he hedge und s ake one mon h and h ee mon hs
p io o he o e announcemen a e signi ican ly associa ed wi h he o e p emium,
aligning wi h he indings o Bodna uk e al. (2009), who iden i ied only he qua e
p io o he o e as being ele an . Fu he mo e, while a signi ican ela ionship o
he o e p emium is ound based on he h ee mon hs olume-weigh ed a e age
p ice (VWAP), he esul s u n insigni ican o he ma ke p emium o he ma kup,
which e lec he p emium on he cu en ma ke condi ions ( esul s a e un eleased
and can be p o ided upon eques ).16
The con ols demons a e he an icipa ed ou comes wi h espec o hei impac on
he o e p emium. Condi ional o e s exhibi signi ican ly highe p emiums, while
p emiums o manda o y o e s a e signi ican ly lowe han hose o olun a y
o e s.
16 The ma ke p emium is e lec ing he cu en s ock p ice en i onmen . I cap u es he p emium o he
o e p ice pe sha e on he s ock p ice wo days be o e o e announcemen .
K
340 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 10 OLS Reg ession on he Takeo e O e P emium
Dependen a iable: O e P emium
= one mon h p io o
he o e
= h ee mon hs p io o
he o e
= six mon hs p io o
he o e
(1) (2) (3)
Hedge und s ake –0.440*
(0.083)
–0.530*
(0.093)
–0.357
(0.314)
Ins i u ional s ake 0.041
(0.481)
0.060
(0.487)
0.131
(0.294)
S a egic s ake –0.092
(0.107)
–0.161**
(0.028)
–0.088
(0.222)
Indi idual s ake –0.035
(0.526)
–0.079
(0.235)
–0.012
(0.843)
Fo eign s ake 0.045
(0.466)
0.082
(0.36)
0.102
(0.16)
Index unds s ake –0.168
(0.83)
–0.340
(0.63)
–0.614
(0.415)
Fi m size 0.001
(0.946)
0.008
(0.274)
0.005
(0.604)
Toehold 0.001
(0.99)
0.107
(0.383)
0.129
(0.289)
Toehold acquisi-
ion
0.017
(0.568)
0.036
(0.245)
0.018
(0.552)
Bidde la ges
sha eholde
–0.044
(0.159)
–0.058
(0.19)
–0.068
(0.175)
Bidde inancial
in es o
–0.120**
(0.024)
–0.085
(0.197)
–0.083
(0.212)
Bidde o eign 0.033
(0.184)
0.048
(0.121)
0.034
(0.296)
Same indus y –0.070
(0.182)
–0.069
(0.253)
–0.061
(0.329)
Rumo –0.069
(0.113)
–0.086*
(0.055)
–0.089**
(0.046)
Ad hoc 0.012
(0.727)
–0.024
(0.495)
–0.011
(0.775)
Cash o e 0.047
(0.348)
0.029
(0.597)
0.001
(0.991)
Hos ile –0.020
(0.525)
–0.039
(0.263)
–0.029
(0.494)
Compe ing o e –0.020
(0.774)
–0.011
(0.873)
–0.013
(0.858)
Mul iple ounds –0.020
(0.624)
–0.032
(0.445)
–0.034
(0.451)
Manda o y o e –0.090***
(0.001)
–0.116***
(0.005)
–0.103***
(0.006)
Minimum accep-
ance a e
0.107***
(0.004)
0.107**
(0.010)
0.106**
(0.014)
C isis 0.073**
(0.024)
0.123***
(0.005)
0.093**
(0.020)
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 341
Table 10 (Con inued)
Dependen a iable: O e P emium
= one mon h p io o
he o e
= h ee mon hs p io o
he o e
= six mon hs p io o
he o e
(1) (2) (3)
Indus y FE Yes Yes Yes
Cons an Yes Yes Yes
R-squa e 0.304 0.293 0.285
Adj. R-squa e 0.181 0.168 0.160
N221 221 222
S anda d e o s a e clus e ed by yea o o e announcemen
P- ales a e epo ed in pa en heses
***, **, and * ep esen s a is ical signi icance a he 1, 5, and 10% le el, espec i ely
5.2.3 Robus ness
The indings o ou analyses migh be suscep ible o endogenei y. To add ess a po-
en ial omi ed a iable bias, we include a b oad ange o con ol a iables sugges ed
by he ex an li e a u e. Fo ins ance, we inco po a e umo /ad hoc dummies, which
a e designed o cap u e ma ke expec a ions o an impending akeo e o e . Ad-
di ionally, ou eg ession models in he p e ious wo sec ions inco po a e indus y
ixed e ec s accoun ing o unobse ed indus y ends ha could po en ially in lu-
ence ou esul s. S anda d e o s a e clus e ed on he yea o o e announcemen
o accoun o po en ial esidual co ela ion ac oss ime. The inclusion o yea ixed
e ec s and he clus e ing o s anda d e o s by ime and yea yield co obo a ing
esul s. (Resul s a e un epo ed and a ailable upon eques ).
We add ess po en ial measu emen e o o he independen a iables by analyz-
ing and p esen ing a ious models in e ms o he mon h o qua e ha owne ship
cha ac e is ics a e compu ed on. This ex ension lends u he suppo o ou in-
e p e a ion ha hedge unds migh use p i a e in o ma ion o upcoming akeo e
o e s.
6Conclusion
In ou s udy, we in es iga e he ela ion be ween a company’s sha eholde s uc u e
and i s likelihood o becoming a a ge o a akeo e o e in he Ge man akeo e
ma ke . We ocus on he owne ship s ake o hedge unds. Fu he mo e, he s udy aims
o shed ligh on he channel o e ec s, ha is whe he hedge unds possess supe io
ading skills, exploi p i a e in o ma ion, o s imula e akeo e s. Addi ionally, we
analyze he impac o p e-o e owne ship o hedge unds on he ou come o gi en
akeo e o e s.
In acco dance wi h ou hypo heses, we ind ha a highe hedge und s ake is
associa ed wi h a signi ican ly highe akeo e likelihood. Con e sely, a highe in-
dex und s ake signi ican ly dec eases he p obabili y o acing a akeo e o e . Ou
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342 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
indings e eal ha publicly obse able inancial, balance shee and ma ke in o ma-
ion o e limi ed insigh in o whe he a company is becoming a akeo e a ge , and
consequen ly an in es men oppo uni y o hedge unds. This obse a ion p o ides
ini ial e idence ha hedge unds may ha e access o p i a e in o ma ion ega ding
impending akeo e o e s. To u he subs an ia e his conclusion, we conduc se -
e al es s. We di e en ia e be ween bidde ypes and ind ha hedge unds bene i
om p i a e in o ma ion when hey ha e access o ad iso s o he a ge , inancial
in es o s, and/o inside s in ol ed in he inancing o he deal. We also ind ha
i ms wi h a high le el o hedge und engagemen ha e highe p edic ion success
a es, i.e., a highe le el o co ec a ge p edic ions and a lowe le el o alse p e-
dic ions. This sys ema ic ading pa e n is sugges i e o he exploi a ion o p i a e
in o ma ion.
We also in es iga e whe he hedge unds sys ema ically impac he akeo e suc-
cess a e, and obse e he high le el o mino i y p o ec ion by Ge man co po a e
law o o e an addi ional s a egy o hedge unds by specula ing on a highe com-
pensa ion connec ed o he signing o a domina ion ag eemen o a squeeze ou a e
a success ul akeo e o e . This “backend” o “endgame” specula ion in Ge man
akeo e o e s meanwhile is popula among hedge unds (Dobmeie e al. 2020).
To eap hese bene i s, hedge unds pu suing such a s a egy as p e-o e a ge
sha eholde s may weigh he economic e ec s o he akeo e o e i sel agains he
po en ial bene i s o a success ul o e allowing his “endgame” specula ion. This
addi ional s a egy complica es he obse a ion o s aigh o wa d e ec s o hedge
und owne ship on he di ec ou come o akeo e o e s. We ind a highe hedge
und s ake p io o he o e o be associa ed wi h a highe akeo e success a e in
cases wi hou a minimum accep ance condi ion. Howe e , when conside ing condi-
ional o e s, no s a is ically signi ican impac is obse ed. The esul s imply ha
hedge unds ca e ully e alua e he po en ial bene i s and d awbacks o accep ing
o ejec ing an o e , and specula e on a highe compensa ion in case o an o e
success. Addi ionally, bidde s o e lowe p emiums in o e s wi h a highe p e-
o e hedge und s ake, sugges ing ha hey ake he po en ial specula ion on highe
compensa ion in he la e endgame in o accoun .
Conduc ing a ange o obus ness es s, we ind ou esul s o be s able: we
al e he model speci ica ions, in e ms o he a iables applied o cap u e i m
cha ac e is ics p io o he bid; addi ionally, we es ima e ou eg ession models
based on mul i a ia e dis ance ma ching and p opensi y sco e ma ching in a ious
o ms.
The inal in e p e a ion o ou esul s poin s owa ds hedge unds exploi ing p i-
a e in o ma ion on impending akeo e o e s. While we ind s a is ically signi ican
suppo o his hypo hesis, we canno comple ely ule ou ha he e e se channel
ha hedge unds s imula e akeo e o e s by ac i ism migh be e ec i e. We ec-
ognize hese limi a ions o ou analyses which a e mainly based on lacking da a.
A no able dis inc ion in egula o y amewo ks is e iden in he Ge man ma ke ,
whe e in es o s a e no obliga ed o disclose hei in en ions o be ac i e o passi e,
as is manda ed in he US wi h he schedule 13D and 13G, espec i ely.
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 343
7 Appendix
Table 11 Sample Dis ibu ion by Yea and Balance o Ta ge s o Non- a ge s
Panel A: Dis ibu ion by Yea
Yea Ta ge i m-
yea s
Non- a ge i ms-
yea s
To al Balance: Ta ge s o o al,
in %
2006 12 190 202 5.9
2007 35 242 277 12.6
2008 27 276 303 8.9
2009 17 283 300 5.7
2010 15 289 304 4.9
2011 21 315 336 6.3
2012 18 315 333 5.4
2013 15 310 325 4.6
2014 19 330 349 5.4
2015 13 351 364 3.6
2016 10 388 398 2.5
2017 15 378 393 3.8
2018 9 380 389 2.3
2019 20 376 396 5.1
2020 14 385 399 3.5
To al 260 4808 5068 5.1
Panel B: Dis ibu ion by Indus y
Indus y Ta ge i ms-
yea s
Non- a ge i ms-
yea s
To al
Basic Ma e ials 1 68 69
Chemicals 5 377 382
Consume
Goods
35 569 604
Consume Se -
ices
32 472 504
Financial Se -
ices
51 253 304
Heal h Ca e 27 465 492
Indus ials 47 1414 1461
Oil & Gas 7 74 81
Technology 47 834 881
Telecommunica ions 1 120 121
U ili ies 7 162 169
O he s 0 0 0
To al 260 4808 5068
Panel A shows he dis ibu ion o i ms ha became a ge s by yea o o e announcemen and Ge man
publicly lis ed i ms ha did no ecei e a akeo e o e . Since we analyze akeo e likelihood based on
i m cha ac e is ics o he p e ious yea end, he numbe o con ols is based on da a a hand o he p io
yea . The balance calcula es he sha e o a ge s o non- a ge i ms in he sample. All a iable de ini ions
a e in Table 12
Panel B shows he dis ibu ion by indus y, based on he indus y classi ica ion by Thomson Reu e s and
by Clea y Go lieb and Hamil on (2017). All a iable de ini ions a e in Table 12
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344 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 12 Va iable De ini ions. (Va iable de ini ions a e pa ly based on Dobmeie e al. 2019)
Va iable De ini ion Sou ce
Ta ge Dummy se o one i company is becoming a akeo e a ge in espec i e yea Ba in akeo e o e documen s
and Thomson ONE’s sc eening
unc ion
Owne ship cha ac e is ics
Hedge und s ake Sha eholde s wi h in es o sub- ype: In es men Ad iso /Hedge Fund and hedge und speci ic in es -
men s yle: Hedge Fund, Momen um, Agg essi e G ow h, Global Mac o, Special y, Long/Sho . O wi h
in es o sub- ype Hedge Fund
Thomson Reu e s Eikon, based on
Dobmeie e al. (2020)
Ins i u ional s ake Numbe o sha es ins i u ional sha eholde s (excluding index unds and ETFs) own in a ge company
di ided by numbe o sha es no unde bidde ’s con ol a he o e
Thomson Reu e s Eikon
Index und s ake Numbe o sha es index unds and ETFs own in a ge company di ided by numbe o sha es no unde
bidde ’s con ol a he o e
Thomson Reu e s Eikon
Indi idual s ake Numbe o sha es indi idual sha eholde s (i.e., indi idual pe sons and amilies) own in a ge company
di ided by numbe o sha es no unde bidde ’s con ol a he o e
Thomson Reu e s Eikon
S a egic s ake Numbe o sha es s a egic sha eholde s own in a ge company di ided by numbe o sha es no unde
bidde ’s con ol a he o e
Thomson Reu e s Eikon
Fo eign s ake Numbe o sha es o eign sha eholde s (i.e., c oss-bo de sha eholde ) own in a ge company di ided by
numbe o sha es no unde bidde ’s con ol a he o e
Thomson Reu e s Eikon
Fi m speci ic cha ac e is ics
Fi m size: To al asse s Na u al loga i hm o o al asse s (book alue based on income s a emen ) –
Ine icien mgm :
Re u n on Equi y
Ne income ela i e o las and cu en yea ’s a e age common equi y Thomson Reu e s Eikon
G ow h esou ce
imbalance dummy
Dummy se o one in case o abo e sample a e age sales g ow h and le e age, bu below a e age liquidi y
o below sample a e age sales & le e age bu abo e a e age liquidi y. Based on a e age o 2-yea sales
g ow h, le e age and liquidi y
Thomson Reu e s Eikon
Unde alua ion: Ma -
ke o book a io
Ma ke capi aliza ion ela i e o book alue o o al asse s Thomson Reu e s Eikon
Unde alua ion: Di i-
dend yield
Di idend pe sha e ela i e o sha e p ice Thomson Reu e s Eikon
K
Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 345
Table 12 (Con inued)
Va iable De ini ion Sou ce
Ta ge Dummy se o one i company is becoming a akeo e a ge in espec i e yea Ba in akeo e o e documen s
and Thomson ONE’s sc eening
unc ion
Le e age To al deb (sho e m and cu en po ion o long e m deb ) ela i e o o al asse s Thomson Reu e s Eikon
Liquidi y Ra io o cash & equi alen s (cash and ma ke able secu i ies based on book alue) ela i e o he i m’s
o al asse s
Thomson Reu e s Eikon
Momen um: S ock
p ice momen um
One yea s ock e u n: Mon hly a e age closing p ice ela i e o mon hly a e age closing p ice in p io
yea
Thomson Reu e s Eikon
Momen um: T ading
olume
Numbe o sha es aded mon hly ela i e o o al ee- loa ma ke capi aliza ion Thomson Reu e s Eikon
Indus y-speci ic cha ac e is ics
Indus y iden i ie 4-digi SIC code (s anda d indus y classi ica ion) Thomson Reu e s Eikon
Indus y dis u bance
dummy
Dummy a iable se o one i a akeo e ook place in he p io yea in he same indus y (4-digi SIC
code)
Thomson Reu e s Eikon
Indus y concen a ion Ma ke sha es p oxied by summing squa ed o al sales o all i ms in he espec i e indus y (4-digi SIC
code)
Thomson Reu e s Eikon
Mac o-speci ic cha ac e is ics
Ma ke sen imen Dummy a iable se o one i he P ime All Sha e index has a posi i e o al e u n in he p e ious yea Thomson Reu e s Eikon
Bidde cha ac e is ics
Toehold Pe cen age o sha es in he a ge company owned by he bidde p io o he o e (incl. p e-nego ia ed
sha es/secu ed h ough i e ocable unde akings)
O e documen on BaFin websi e,
Thomson Reu e s Eikon
Toehold acquisi ion Dummy se o one i he bidde acqui ed a s ake in he a ge du ing six mon hs p io o he o e O e documen on BaFin websi e
La ges sha eholde Dummy se o one i he bidde is he la ges sha eholde p io o he o e announcemen Thomson Reu e s Eikon
Financial in es o Dummy se o one i he bidde is a inancial in es o , including p i a e equi y Thomson Reu e s Eikon
Fo eign Dummy se o one i he bidde s ope a es om a non-Ge man speaking coun y Thomson Reu e s Eikon
Same indus y Dummy se o one i he bidde ope a es in he same indus y as he a ge company Thomson Reu e s Eikon, Clea y
Go lieb and Hamil on (2017)
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346 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 12 (Con inued)
Va iable De ini ion Sou ce
Ta ge Dummy se o one i company is becoming a akeo e a ge in espec i e yea Ba in akeo e o e documen s
and Thomson ONE’s sc eening
unc ion
Deal cha ac e is ics
Success a e Numbe o sha es bidde acqui ed du ing he accep ance pe iod ela i e o sha es he bidde did no ha e
unde con ol a he o e
Cons uc ed based on o e docu-
men on BaFin websi e
O e p emium P emium o he o e p ice pe sha e on he h ee mon hs olume weigh ed a e age a ge s ock p ice,
(OP/VWAP-1)
O e documen on BaFin websi e
Rumo Dummy se o one i he akeo e o e is p eceded by a umo in he media/news specula ions one yea
be o e o e announcemen
O e documen on Ba in websi e,
news/ad hoc online esea ch
Ad hoc Dummy se o one i a ge o bidde dissemina ed an ad hoc no i ica ion on a possible upcoming o e
one yea be o e o e announcemen
O e documen on BaFin websi e,
news/ad hoc online esea ch
Cash o e Dummy se o one i he compensa ion o e ed by he bidde is cash only O e documen on BaFin websi e
Hos ile Dummy se o one i he a ge managemen ecommends hei sha eholde s o ejec he o e S a emen o boa d o di ec o s,
Bundesanzeige
Compe ing o e Dummy se o one i he akeo e o e is accompanied by a compe ing bid O e documen on BaFin websi e
Mul iple ounds Dummy se o one i he accep ance pe iod is ex ended due o changes o he o e condi ions by he bid-
de
O e documen on BaFin websi e
Manda o y o e Dummy se o one i he akeo e o e cons i u es a manda o y o e by egula ion O e documen on BaFin websi e
Minimum accep ance
a e
Dummy se o one i he akeo e o e is subjec o a minimum accep ance a e o sha es o becoming
alid
O e documen on BaFin websi e
C isis Dummy se o one i he akeo e o e was published in a c isis yea , i.e. inancial c isis in 2008 and
2009 and Eu o c isis 2012
O e documen on BaFin websi e
This able p o ides de ini ions o he a iables used in he analyses
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Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355 347
Table 13 Dis ibu ion o Es ima ed Acquisi ion P obabili y in T aining Sample—Model 5 based on
P opensi y Sco e Ma ching
Es ima ed acquisi ion p obabil-
i y
To al o
i ms
Ac ual a ge s Ma ched non-
a ge s
In e als, in % Mid
alue
Numbe Numbe 1(p)
(in %)
Numbe 2(p)
(in %)
1(p)/
2(p)
0.000 0.069 0.035 32 3 1.4 29 1.6 0.89
0.070 0.139 0.104 1550 83 39.7 1467 81.2 0.49
0.140 0.209 0.174 174 36 17.2 138 7.6 2.26
0.210 0.279 0.244 96 22 10.5 74 4.1 2.57
0.280 0.349 0.314 55 14 6.7 41 2.3 2.95
0.350 0.419 0.384 53 22 10.5 31 1.7 6.14
0.420 0.489 0.454 24 9 4.3 15 0.8 5.19
0.490 0.559 0.525 18 10 4.8 8 0.4 10.81
0.560 0.629 0.595 7 4 1.9 3 0.2 11.53
0.630 0.699 0.665 5 4 1.9 1 0.1 34.58
>0.7 – – 2 2 1.0 0 0.0 –
To al – – 2016 209 100 1807 100 –
The en in e als (uppe and lowe bound displayed) ange om he minimum o he maximum likelihood
o 74.12%
The able shows he numbe o a ge and con ol i ms wi hin each in e al as well as he pe cen age (see
1(p)and 2(p))
The cu -o p obabili y is he alue whe e he a io o 1(p)/ 2(p) equals 1 (11.8% sol ed ia in e pola ion)
Table 14 Dis ibu ion o Es ima ed Acquisi ion P obabili y in T aining Sample—Model 5 based on
P opensi y Sco e Ma ching—Equal-sized Po olios
Es ima ed acquisi ion
p obabili y
Ac ual a ge s Non- a ge s Cu -
o
p ob.,
in %
Benchma ks
Range, in %
(min–max)
Mid
alue
N 1(p)
(in %)
N 2(p)
(in %)
P ecision
(in %)
Recall
(in %)
Accu acy
(in %)
0.00 0.02 0.01 2 1 200 11 0.00 10.4 100.0 10.4
0.02 0.03 0.02 5 2 197 11 0.02 11.4 99.0 20.2
0.03 0.04 0.03 8 4 193 11 0.03 12.5 96.7 29.8
0.04 0.05 0.04 9 4 193 11 0.04 13.8 92.8 38.9
0.05 0.06 0.06 13 6 188 10 0.05 15.2 88.0 48.0
0.06 0.08 0.07 20 10 182 10 0.06 17.1 82.3 56.7
0.08 0.11 0.09 11 5 191 11 0.08 18.9 72.7 64.7
0.11 0.15 0.13 22 11 179 10 0.11 23.4 67.5 73.7
0.15 0.25 0.20 43 21 159 9 0.15 29.6 56.9 81.5
0.25 0.74 0.49 76 36 125 7 0.25 37.8 36.4 87.2
To al – – 209 100 1807 100 – – – –
The a ge and non- a ge i ms a e di ided in o en equal-sized po olios and p esen ed in descending
akeo e likelihood
The able shows he numbe o a ge and con ol i ms wi hin each in e al as well as he pe cen age (see
1(p)and 2(p))
The cu -o p obabili y is he lowe h eshold o each decile
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348 Schmalenbach Jou nal o Business Resea ch (2025) 77:309–355
Table 15 Dis ibu ion o Es ima ed Acquisi ion P obabili y in T aining Sample—Model 1—Equal-sized
Po olios
Es ima ed acquisi ion
p obabili y
Ac ual a ge s Non- a ge s Cu -
o
p ob
Benchma ks
Range
(min–max)
Mid
alue
N 1(p)
(in %)
N 2(p)
(in %)
P ecision
(in %)
Recall
(in %)
Accu acy
(in %)
0.00 0.01 0.01 5 2 397 10 0.00 5.6 100.0 5.6
0.01 0.02 0.01 10 4 391 10 0.01 6.1 97.8 15.4
0.02 0.02 0.02 7 3 395 10 0.02 6.5 93.3 24.9
0.02 0.03 0.02 12 5 389 10 0.02 7.2 90.2 34.5
0.03 0.03 0.03 8 4 393 10 0.03 7.9 84.8 43.9
0.03 0.04 0.04 14 6 388 10 0.03 9.1 81.3 53.5
0.04 0.06 0.05 14 6 387 10 0.04 10.5 75.0 62.8
0.06 0.08 0.07 26 12 376 10 0.06 12.8 68.8 72.1
0.08 0.12 0.10 34 15 367 10 0.08 16.0 57.1 80.8
0.12 0.90 0.51 94 42 307 8 0.12 23.5 42.0 89.1
To al – – 224 100 3790 100 – – – –
Table 16 Hedge Fund In es men Success—Ac ual and Po en ial Ta ge Fi ms spli in o Quin iles based
on Hedge Fund In es men
Hedge und in es men P edic ion benchma ks Classi ica ions
Te cile NMean
(in %)
P ecision
(in %)
Recall
(in %)
Accu acy
(in %)
TP TN FP FN
Panel A: Model 5 (cu -o p obabili y based on in e sec ion o densi y cu es)
1 999 0.0 27.7 73.4 76.2 80 681 209 29
3 211 0.1 19.6 52.6 86.1 10 151 41 9
4 403 0.5 20.0 48.6 76.9 17 300 68 18
5 403 5.1 24.8 63.0 93.2 29 269 88 17
Sum/
Mean
2016 1.1 – – – 136 1401 406 73
Panel B: Model 1 (cu -o p obabili y based on in e sec ion o densi y cu es)
1 1904 0.0 14.9 74.6 73.0 85 1305 485 29
3 505 0.1 9.9 47.4 81.8 9 404 82 10
4 803 0.5 10.5 48.6 79.7 17 623 145 18
5 802 4.9 14.3 67.9 69.5 38 519 227 18
Sum/
Mean
4014 1.1 – – – 149 2851 939 75
Panel C: Model 5 (in es ing in o la ges wo deciles o akeo e p obabili y)
1 999 0.0 32.1 65.1 81.2 71 740 150 38
3 211 0.1 29.4 52.6 84.4 10 168 24 9
4 403 0.5 23.3 40.0 83.4 14 322 46 21
5 403 5.1 27.6 52.2 78.9 24 294 63 22
Sum/
Mean
2016 1.1 – – – 119 1524 283 90
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Publishe ’s No e Sp inge Na u e emains neu al wi h ega d o ju isdic ional claims in published maps
and ins i u ional a ilia ions.
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