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Does the organisational form of the target influence market reaction to acquisition announcements? Australian evidence

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  • Shams, Syed M.M.
  • Gunasekarage, Abeyratna
  • Colombage, Sisira R.N.

Abstract

Using public, private and subsidiary acquisitions, we examine whether abnormal returns to bidders depend on the organisational form of the target acquired. The evidence supports two main hypotheses: (i) bidders on private and subsidiary targets earn higher abnormal returns than bidders on public entities and (ii) bidders on private targets earn higher abnormal returns when the method of payment is stock. Acquisitions of unlisted public targets, privately negotiated acquisitions of private targets and acquisitions of subsidiaries from listed parents for cash are associated with higher abnormal returns.

Suggested Citation

  • Shams, Syed M.M. & Gunasekarage, Abeyratna & Colombage, Sisira R.N., 2013. "Does the organisational form of the target influence market reaction to acquisition announcements? Australian evidence," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 89-108.
  • Handle: RePEc:eee:pacfin:v:24:y:2013:i:c:p:89-108
    DOI: 10.1016/j.pacfin.2013.04.002
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    Cited by:

    1. Pham, Nga & Oh, K.B. & Pech, Richard, 2015. "Mergers and acquisitions: CEO duality, operating performance and stock returns in Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 298-316.
    2. repec:eee:jocaae:v:12:y:2016:i:1:p:1-14 is not listed on IDEAS
    3. Kai-Shi Chuang, 2017. "The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market," Review of Quantitative Finance and Accounting, Springer, vol. 48(3), pages 677-699, April.
    4. repec:fau:fauart:v:67:y:2017:i:5:p:423-438 is not listed on IDEAS
    5. Shams, Syed M.M. & Duong, Huu Nhan & Singh, Harminder, 2016. "Information content of directors' trading around acquisitions," Pacific-Basin Finance Journal, Elsevier, vol. 38(C), pages 177-193.

    More about this item

    Keywords

    Acquisitions; Nature of the target; Abnormal returns; Method of payment; Bid characteristics;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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