Competition in the acquisition market and returns to bidders in Australia
Article
Article Title | Competition in the acquisition market and returns to bidders in Australia |
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ERA Journal ID | 19591 |
Article Category | Article |
Authors | |
Author | Shams, Syed |
Journal Title | Research in International Business and Finance |
Journal Citation | 55, pp. 1-21 |
Article Number | 101339 |
Number of Pages | 21 |
Year | 2021 |
Place of Publication | United States |
ISSN | 0275-5319 |
1878-3384 | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.ribaf.2020.101339 |
Web Address (URL) | https://www.sciencedirect.com/science/article/abs/pii/S0275531920309478 |
Abstract | This study investigates the impact of takeover market competition on the short-run market performance of Australian acquirers. While the market for corporate control predicts a positive association between takeover market competition and acquirers’ announcement period returns, the winner’s curse hypothesis predicts a negative relationship. Using six alternative proxies to capture acquisitions market competition, I find that takeover market competition has a significant negative influence on acquirers’ announcement period returns. However, this effect is more pronounced among private target acquirers, large acquirers and stock-financed acquisitions. The findings further reveal that large bidders acquiring private targets through stock-financed acquisitions are the most penalised group in the capital market in a competitive acquisitions market. Additionally, evidence is found which suggests that competition-induced bids are associated with significantly higher bid premiums and experience negative post-acquisition performance. The findings remain robust to the implementation of alterations to several methodological concerns, the issue of endogeneity and sample selection variations. |
Keywords | Acquisitions; Takeover market competition; Private target acquirers, Public target acquirers; Cumulative abnormal return; Size effect |
ANZSRC Field of Research 2020 | 350202. Finance |
Byline Affiliations | School of Commerce |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q5ywx/competition-in-the-acquisition-market-and-returns-to-bidders-in-australia
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