Target’s organisational form and returns to Australian bidders in cross-border acquisitions

Article

Colombage, Sisira R. N., Gunasekarage, Abeyratna and Shams, Syed M. M.. 2014. "Target’s organisational form and returns to Australian bidders in cross-border acquisitions." Accounting and Finance. 54 (4), pp. 1063-1091. https://doi.org/10.1111/acfi.12031
Article Title

Target’s organisational form and returns to Australian bidders in cross-border acquisitions

ERA Journal ID19059
Article CategoryArticle
AuthorsColombage, Sisira R. N. (Author), Gunasekarage, Abeyratna (Author) and Shams, Syed M. M. (Author)
Journal TitleAccounting and Finance
Journal Citation54 (4), pp. 1063-1091
Number of Pages29
Year2014
PublisherJohn Wiley & Sons
Place of PublicationAustralia
ISSN0810-5391
1467-629X
Digital Object Identifier (DOI)https://doi.org/10.1111/acfi.12031
Web Address (URL)http://onlinelibrary.wiley.com/doi/10.1111/acfi.12031/abstract;jsessionid=46362730404F4DBCA6ABF4971E3856A4.f04t04
Abstract

We present large sample evidence on return performances of Australian acquirers who bid for public and private targets in cross-border acquisitions. While placing a particular emphasis on the method of payment and the shareholder protection offered by the target country, we analyse the impact of various bid, firm and foreign-acquisition-specific characteristics on bidding firms’ abnormal returns. We find that Australian investors perceive cross-border acquisitions as value-creating exercises regardless of the organizational form of the target acquired. However, bidders for private targets earn higher return when the method of payment is stock and the targets are located in high investor protection countries. We further find that the abnormal returns are conditional to the relative size of the target, bid frequency, target country destination and the preacquisition financial performance of bidding firms.

Keywordsacquirers of private targets; acquirers of public targets; economic freedom; excess return; foreign acquisitions; investor protection
ANZSRC Field of Research 2020350202. Finance
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Byline AffiliationsMonash University
Institution of OriginUniversity of Southern Queensland
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