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The returns to bidding firms in corporate takeovers: splitting up the pie


  • Han Donker
  • Saif Zahir


In this paper, we examined the impact of ownership concentration in target firms on the returns to shareholders of bidding firms. In this research, we found that shareholders of bidding earn statistically significant positive abnormal returns surrounding takeover announcements. In addition, we found bidder returns of 4% over the event-window [−20, +20]. We showed that the degree of ownership concentration in target firms – measured by the Herfindahl-concentration index – significantly and positively affects the returns to bidding firms. These findings are consistent with the predictions of Grossman and Hart (1980), Bagnoli and Lipman (1988) and Holmstrom and Nalebuff (1992) takeover models.

Suggested Citation

  • Han Donker & Saif Zahir, 2009. "The returns to bidding firms in corporate takeovers: splitting up the pie," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 1(4), pages 340-357.
  • Handle: RePEc:ids:injbaf:v:1:y:2009:i:4:p:340-357

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