IDEAS home Printed from https://ideas.repec.org/a/taf/eurjfi/v1y1995i3p279-309.html
   My bibliography  Save this article

An analysis of gains and losses to shareholders of foreign bidding companies engaged in cross-border acquisitions into the United Kingdom, 1986-1991

Author

Listed:
  • Jo Danbolt

Abstract

In this paper the gains and losses to shareholders of 71 foreign companies which made takeover bids for companies listed in the United Kingdom during the 1986-1991 period are analysed. The average abnormal return during the month of the bid announcement was positive, although not statistically significant. However, both prior to and sub-sequent to the bid announcement month, the overseas bidders earned highly significant negative abnormal returns. The cumulative abnormal returns over the five month period following the bid announcement were-4.77% with the index model and -9.79% with the market model. Further analysis established that Continental European companies performed significantly worse than American bidders. In addition, large companies and companies bidding for large targets, performed significantly better than the other bidders.

Suggested Citation

  • Jo Danbolt, 1995. "An analysis of gains and losses to shareholders of foreign bidding companies engaged in cross-border acquisitions into the United Kingdom, 1986-1991," The European Journal of Finance, Taylor & Francis Journals, vol. 1(3), pages 279-309.
    • Handle: RePEc:taf:eurjfi:v:1:y:1995:i:3:p:279-309
    DOI: 10.1080/13518479500000021
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/13518479500000021
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13518479500000021?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Doyle, Denis P., 1984. "United States: Federal policies for education for the disadvantaged : Organisation for Economic Co-operation and Development (OECD). Paris: OECD, 1981. pp. 126. $8.50 (paper)," Economics of Education Review, Elsevier, vol. 3(2), pages 160-161, April.
    2. Deborah L. Swenson, 1993. "Foreign Mergers and Acquisitions in the United States," NBER Chapters, in: Foreign Direct Investment, pages 255-284, National Bureau of Economic Research, Inc.
    3. Kenneth A. Froot, 1993. "Foreign Direct Investment," NBER Books, National Bureau of Economic Research, Inc, number froo93-1, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mateev, Miroslav & Andonov, Kristiyan, 2016. "Do cross-border and domestic bidding firms perform differently? New evidence from continental Europe and the UK," Research in International Business and Finance, Elsevier, vol. 37(C), pages 327-349.
    2. Robert L Conn & Andy Cosh & Paul M Guest & Alan Hughes, 2003. "The Impact on U.K. Acquirers of Domestic, Cross-border, Public and Private Acquisitions," Working Papers wp276, Centre for Business Research, University of Cambridge.
    3. Ervin L. Black & Thomas A. Carnes & Tomas Jandik & B. Charlene Henderson, 2007. "The Relevance of Target Accounting Quality to the Long‐Term Success of Cross‐Border Mergers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(1‐2), pages 139-168, January.
    4. Robert L. Conn & Andy Cosh & Paul M. Guest & Alan Hughes, 2005. "The Impact on UK Acquirers of Domestic, Cross‐border, Public and Private Acquisitions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(5‐6), pages 815-870, June.
    5. McCahery, J.A. & Renneboog, L.D.R., 2003. "The Economics of the Proposed European Takeover Directive," Other publications TiSEM b16fdfd0-9e4e-44bb-b20f-f, Tilburg University, School of Economics and Management.
    6. Andriosopoulos, Dimitris & Yang, Shuai & Li, Wei-an, 2016. "The market valuation of M&A announcements in the United Kingdom," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 350-366.
    7. C Conn & A Cosh & P Guest & A Hughes, 2001. "Long-Run Share Performance of UK Firms Engaging in Cross-Border Acquisitions," Working Papers wp214, Centre for Business Research, University of Cambridge.
    8. Gregory, Alan & O'Donohoe, Sheila, 2014. "Do cross border and domestic acquisitions differ? Evidence from the acquisition of UK targets," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 61-69.
    9. Pandey, Vivek & Steigner, Tanja & Sutton, Ninon K., 2023. "The value of economic freedom in cross-border mergers," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 540-563.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bertrand, Olivier & Zuniga, Pluvia, 2006. "R&D and M&A: Are cross-border M&A different? An investigation on OECD countries," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 401-423, March.
    2. Mateev, Miroslav & Andonov, Kristiyan, 2018. "Do European bidders pay more in cross-border than in domestic acquisitions? New evidence from Continental Europe and the UK," Research in International Business and Finance, Elsevier, vol. 45(C), pages 529-556.
    3. Kyoji Fukao & Keiko Ito & Hyeog Ug Kwon & Miho Takizawa, 2008. "Cross-Border Acquisitions and Target Firms' Performance: Evidence from Japanese Firm-Level Data," NBER Chapters, in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy, pages 347-389, National Bureau of Economic Research, Inc.
    4. Ralph Sonenshine & Kara Reynolds, 2014. "Determinants of cross-border merger premia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 173-189, February.
    5. Gregory, Alan & McCorriston, Steve, 2005. "Foreign acquisitions by UK limited companies: short- and long-run performance," Journal of Empirical Finance, Elsevier, vol. 12(1), pages 99-125, January.
    6. Robert E. Lipsey & Robert C. Feenstra & Carl H. Hahn & George N. Hatsopoulos, 1999. "The Role of Foreign Direct Investment in International Capital Flows," NBER Chapters, in: International Capital Flows, pages 307-362, National Bureau of Economic Research, Inc.
    7. Robert C. Feenstra, "undated". "Facts And Fallacies About Foreign Direct Investment," Department of Economics 98-04, California Davis - Department of Economics.
    8. Günter K. Stahl & Andreas Voigt, 2008. "Do Cultural Differences Matter in Mergers and Acquisitions? A Tentative Model and Examination," Organization Science, INFORMS, vol. 19(1), pages 160-176, February.
    9. Bertrand, Olivier, 2009. "Effects of foreign acquisitions on R&D activity: Evidence from firm-level data for France," Research Policy, Elsevier, vol. 38(6), pages 1021-1031, July.
    10. Hussinger, Katrin & Grimpe, Christoph, 2008. "Market and Technology Access Through Firm Acquisitions: Beyond One Size Fits All," ZEW Discussion Papers 08-037, ZEW - Leibniz Centre for European Economic Research.
    11. Chen, Wenjie, 2011. "The effect of investor origin on firm performance: Domestic and foreign direct investment in the United States," Journal of International Economics, Elsevier, vol. 83(2), pages 219-228, March.
    12. Oldford, Erin & Otchere, Isaac, 2016. "Are cross-border acquisitions enemy of labor? An examination of employment and productivity effects," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 438-455.
    13. Kuipers, David R. & Miller, Darius P. & Patel, Ajay, 2009. "The legal environment and corporate valuation: Evidence from cross-border takeovers," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 552-567, October.
    14. Frey, Rainer & Hussinger, Katrin, 2006. "The role of technology in M&As: a firm-level comparison of cross-border and domestic deals," Discussion Paper Series 1: Economic Studies 2006,45, Deutsche Bundesbank.
    15. Rajesh Chakrabarti & Barry Scholnick, 2002. "Exchange rate expectations and foreign direct investment flows," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(1), pages 1-21, March.
    16. Fredriksson, Per G. & List, John A. & Millimet, Daniel L., 2003. "Bureaucratic corruption, environmental policy and inbound US FDI: theory and evidence," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1407-1430, August.
    17. Fukunari Kimura & Robert E. Baldwin, 1998. "Application of a Nationality-Adjusted Net Sales and Value- Added Framework: The Case of Japan," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 49-82, National Bureau of Economic Research, Inc.
    18. Beata K. Smarzynska & Shang-Jin Wei, 2002. "Corruption and Cross-Border Investment: Firm-Level Evidence," William Davidson Institute Working Papers Series 494, William Davidson Institute at the University of Michigan.
    19. Mark E. Doms & J . Bradford Jensen, 1998. "Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 235-258, National Bureau of Economic Research, Inc.
    20. Hill, Hal, 2000. "Export Success Against the Odds: A Vietnamese Case Study," World Development, Elsevier, vol. 28(2), pages 283-300, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:eurjfi:v:1:y:1995:i:3:p:279-309. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REJF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.