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The Impact of Takeover Offer Timing on the Measurement of Australian Bidder Gains: 1976 to 1995

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  • David P. Simmonds

    (Department of Finance H03, University of Sydney, NSW 2006 and Centre for Research in Finance, Australian Graduate School of Management, UNSW, Sydney, NSW 2052.)

Abstract

This paper demonstrates that the measurement of investor reactions to bidder offers is intimately affected by the endogenous nature of bidding. Bidding activity is not random. Offers are made at times that suit bidders. We show that bidder characteristics before an offer differ markedly from those of other firms and that these differences significantly impact on naïve inferences of shareholder reactions to an offer. When appropriate adjustments are made to properly control for pre-offer characteristics, bidding shareholders are found to enjoy significant wealth increases.

Suggested Citation

  • David P. Simmonds, 2004. "The Impact of Takeover Offer Timing on the Measurement of Australian Bidder Gains: 1976 to 1995," Australian Journal of Management, Australian School of Business, vol. 29(1_suppl), pages 1-60, June.
    • Handle: RePEc:sae:ausman:v:29:y:2004:i:1_suppl:p:1-60
    DOI: 10.1177/031289620402901S02
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    References listed on IDEAS

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    1. Prabhala, N R, 1997. "Conditional Methods in Event Studies and an Equilibrium Justification for Standard Event-Study Procedures," Review of Financial Studies, Society for Financial Studies, vol. 10(1), pages 1-38.
    2. Acharya, Sankarshan, 1993. "Value of Latent Information: Alternative Event Study Methods," Journal of Finance, American Finance Association, vol. 48(1), pages 363-385, March.
    3. Eckbo, B Espen & Maksimovic, Vojislav & Williams, Joseph, 1990. "Consistent Estimation of Cross-Sectional Models in Event Studies," Review of Financial Studies, Society for Financial Studies, vol. 3(3), pages 343-365.
    4. Nagpurnanand R. Prabhala, 1997. "Conditional Methods in Event-Studies and an Equilibrium Justification for Standard Event-Study Procedures," Yale School of Management Working Papers ysm55, Yale School of Management.
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    Cited by:

    1. Faff, Robert & Prasadh, Shyaam & Shams, Syed, 2019. "Merger and acquisition research in the Asia-Pacific region: A review of the evidence and future directions," Research in International Business and Finance, Elsevier, vol. 50(C), pages 267-278.
    2. Sorin Daniliuc & Chris Bilson & Greg Shailer, 2014. "The Interaction of Post-Acquisition Integration and Acquisition Focus in Relation to Long-Run Performance," International Review of Finance, International Review of Finance Ltd., vol. 14(4), pages 587-612, December.
    3. Farida Akhtar, 2017. "Conditional returns to shareholders of bidding firms: an Australian study," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57, pages 3-43, April.

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