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Public versus private takeovers of Australian stock exchange listed targets

Author

Listed:
  • Martin Bugeja

    (Accounting Discipline Group, University of Technology, Sydney, Australia)

  • Kosta Sinelnikov

    (Discipline of Accounting, University of Sydney, Sydney, Australia)

Abstract

In this study we investigate the association between bidding firm listing status and the abnormal returns and characteristics of target firms, in the context of Australian takeovers. Similar to the US, target abnormal returns are significantly lower in private bids. However, this difference is only significant when comparing public bidders with private non-operating bidders suggesting the results are driven by a lack of operating synergy available to non-operating bidders rather than public bidder agency problems. We also study how target firm characteristics differ between public and private bidders. The results indicate that different private bidders have alternative motivations for making an acquisition. Private equity targets have a less independent board than targets of public bidders and are more undervalued. In comparison, targets of private bidders without existing business activities are smaller, have higher management ownership, lower growth and lower cash flows than targets of public bidders.

Suggested Citation

  • Martin Bugeja & Kosta Sinelnikov, 2012. "Public versus private takeovers of Australian stock exchange listed targets," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 391-414, December.
  • Handle: RePEc:sae:ausman:v:37:y:2012:i:3:p:391-414
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    References listed on IDEAS

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    1. repec:bla:acctfi:v:57:y:2017:i:1:p:165-197 is not listed on IDEAS
    2. repec:bla:acctfi:v:57:y:2017:i::p:3-43 is not listed on IDEAS

    More about this item

    Keywords

    Going private; mergers and acquisitions; takeovers;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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