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The impact of target firm financial distress in Australian takeovers


  • Martin Bugeja
  • David Gallagher


type="main" xml:id="acfi12062-abs-0001"> Of the motives that have been advanced to explain corporate acquisitions, the least explored is the acquisition of a target experiencing financial distress. This study addresses this void by examining whether target firm financial distress is related to takeover: attitude, premiums, payment method, competition and outcome. Despite inconsistent findings across our distress measures the tenor of the results suggest that distressed targets receive higher premiums and are less likely to be offered cash consideration. Additionally, takeover completion is lower and takeover competition higher for targets in financial distress. Financial distress does not influence whether a takeover is hostile or friendly.

Suggested Citation

  • Martin Bugeja & David Gallagher, 2015. "The impact of target firm financial distress in Australian takeovers," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 55(2), pages 361-396, June.
  • Handle: RePEc:bla:acctfi:v:55:y:2015:i:2:p:361-396

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