What Factors Drive Takeovers in Australia?
AbstractWe examine the relationships between the wealth changes associated with a takeover announcement to distinguish between three major competing motives¡Xsynergy, hubris, and agency. Empirical tests indicate that the synergy motive is the predominant explanation for the majority of takeovers in Australia; however, the evidence is consistent with the simultaneous presence of hubris in value-creating takeovers. The evidence also suggests agency, not hubris, is the primary motivation for the takeovers which result in value destruction.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 9 (2010)
Issue (Month): 2 (August)
takeovers; synergy; agency;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bradley, Michael & Desai, Anand & Kim, E. Han, 1988. "Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms," Journal of Financial Economics, Elsevier, vol. 21(1), pages 3-40, May.
- Dodd, Peter & Ruback, Richard, 1977. "Tender offers and stockholder returns : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 5(3), pages 351-373, December.
- Scholes, Myron & Williams, Joseph, 1977. "Estimating betas from nonsynchronous data," Journal of Financial Economics, Elsevier, vol. 5(3), pages 309-327, December.
- Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
- Divesh S. Sharma & Jonathan Ho, 2002. "The Impact of Acquisitions on Operating Performance: Some Australian Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(1&2), pages 155-200.
- R. Glenn Hubbard & Darius Palia, 1999. "A Reexamination of the Conglomerate Merger Wave in the 1960s: An Internal Capital Markets View," Journal of Finance, American Finance Association, vol. 54(3), pages 1131-1152, 06.
- Henry, Darren, 2004. "Corporate governance and ownership structure of target companies and the outcome of takeovers," Pacific-Basin Finance Journal, Elsevier, vol. 12(4), pages 419-444, September.
- Hutson, Elaine & Kearney, Colm, 2001. "Volatility in stocks subject to takeover bids: Australian evidence using daily data," Journal of Empirical Finance, Elsevier, vol. 8(3), pages 273-296, July.
- Shleifer, Andrei & Vishny, Robert W., 1989. "Management entrenchment : The case of manager-specific investments," Journal of Financial Economics, Elsevier, vol. 25(1), pages 123-139, November.
- Berkovitch, Elazar & Narayanan, M. P., 1993. "Motives for Takeovers: An Empirical Investigation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(03), pages 347-362, September.
- Firth, Michael, 1980. "Takeovers, Shareholder Returns, and the Theory of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 94(2), pages 235-60, March.
- Vijay Gondhalekar & Yatin Bhagwat, 2003. "Motives in the Acquisitions of NASDAQ Targets during the Aftermath of the 1987 Crash," The Financial Review, Eastern Finance Association, vol. 38(4), pages 553-569, November.
- Kohers, Ninon & Ang, James, 2000. "Earnouts in Mergers: Agreeing to Disagree and Agreeing to Stay," The Journal of Business, University of Chicago Press, vol. 73(3), pages 445-76, July.
- Darren Henry, 2005. "Directors' Recommendations in Takeovers: An Agency and Governance Analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(1-2), pages 129-159.
- Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
- , 2009. "The Impact of Director Reputation and Performance on the Turnover and Board Seats of Target Firm Directors," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(1-2), pages 185-209.
- Anju Seth & Kean P Song & Richardson Pettit, 2000. "Synergy, Managerialism or Hubris? An Empirical Examination of Motives for Foreign Acquisitions of U.S. Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 31(3), pages 387-405, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yi-Ju Su).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.