Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper presents a disciplinary explanation for some seemingly paradoxical stylized facts from the takeover literature. Most notable among these are: (1) hostile takeovers are predicted better by industry‐wide than by firm‐specific performance failures; and (2) gains from a successful bid for a specific firm extend to other firms in the same industry. Our explanation is based on the idea that managerial incentives based on relative performance evaluation may induce an inefficient industry‐wide equilibrium in which all firms underperform with respect to a value‐maximizing firm, but no firm underperforms with respect to the industry average. A takeover can serve as a means to destroy such an inefficient industry‐wide incentive equilibrium.