Does takeover competition affect acquisition choices and bidding firm performance? Australian evidence
Article
Article Title | Does takeover competition affect acquisition choices and bidding firm performance? Australian evidence |
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ERA Journal ID | 19059 |
Article Category | Article |
Authors | Faff, Robert (Author), Gunasekarage, Abeyratna (Author) and Shams, Syed (Author) |
Journal Title | Accounting and Finance |
Journal Citation | 60 (4), pp. 3581-3619 |
Number of Pages | 39 |
Year | 2020 |
Publisher | John Wiley & Sons |
Place of Publication | United Kingdom |
ISSN | 0810-5391 |
1467-629X | |
Digital Object Identifier (DOI) | https://doi.org/10.1111/acfi.12527 |
Web Address (URL) | https://onlinelibrary.wiley.com/doi/full/10.1111/acfi.12527?casa_token=Zno0ScYYJIkAAAAA%3ApXhoKLwBV19xsneoFxWrawEc6TDml_nHrGn_vpL3TOv4xQDiCm0TvSM-RMdG7z8D2zRo0GWDfphfxfA |
Abstract | We examine the influence of takeover competition on three acquisition choices: (i) public versus private target acquisitions; (ii) stock versus cash financed acquisitions; and (iii) related versus unrelated acquisitions. We find strong evidence of acquirers’ preference for public targets, stock swaps and business focus, in the face of takeover competition. Further, we find that the takeover competition has a positive influence on the bid premium paid to acquirer public targets and those financed with stock issues; competitive bids offered to acquire related targets are associated with significantly low bid premiums. In the short‐term announcement window, competition‐induced bids to acquire public targets and those financed with stock are penalised by the capital market. However, only stock‐financed takeovers undertaken in a competitive takeover market show a long‐run decline in performance of acquirers. |
Keywords | Acquisition choices; Long-run operating performance; Mergersand acquisitions; Short-term market performance; Takeover competition |
ANZSRC Field of Research 2020 | 350202. Finance |
Byline Affiliations | University of Queensland |
Monash University | |
University of Southern Queensland | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q58xw/does-takeover-competition-affect-acquisition-choices-and-bidding-firm-performance-australian-evidence
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