Shams, Syed (2021) Competition in the acquisition market and returns to bidders in Australia. Research in International Business and Finance, 55:101339. pp. 1-21. ISSN 0275-5319
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.
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| Item Type: | Article (Commonwealth Reporting Category C) |
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| Refereed: | Yes |
| Item Status: | Live Archive |
| Faculty/School / Institute/Centre: | Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021) |
| Faculty/School / Institute/Centre: | Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021) |
| Date Deposited: | 13 Oct 2020 06:16 |
| Last Modified: | 23 Apr 2021 05:58 |
| Uncontrolled Keywords: | Acquisitions; Takeover market competition; Private target acquirers, Public target acquirers; Cumulative abnormal return; Size effect |
| Fields of Research (2008): | 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance |
| Identification Number or DOI: | https://doi.org/10.1016/j.ribaf.2020.101339 |
| URI: | http://eprints.usq.edu.au/id/eprint/39880 |
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