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Post-Takeover Effects on Thai Bidding Firms: Are Takeovers in the Bidder's Interests?

Author

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  • D. E. Allen

    (School of Accounting, Finance and Economics, Edith Cowan University, Joondalup Drive, Joondalup, Western Australia)

  • A. Soongswang

    (School of Management, Shinawatra University, Pathumthani Campus, 99 Moo 10 Bangtoey, Samkok, Pathumthani 12160, Thailand)

Abstract

This paper analyses takeover effects on the Thai stock market in terms of their impact on the bidding firms' shareholders. We apply a comprehensive analysis of shareholder wealth effects using multiple methods. Our results conform with prior studies: see Jensen and Ruback (1983), Agrawal and Jaffe (1999), Bruner (2002) and Campa and Hernando (2004). Thai takeovers result in significant negative abnormal returns over the sixteen months after the takeover. The abnormal returns, variously defined, vary from -4% to -6%, and -0.20% (monthly) for the bidding firm's shareholders. Thai takeovers do not appear to add to bidding firms' shareholder wealth.

Suggested Citation

  • D. E. Allen & A. Soongswang, 2006. "Post-Takeover Effects on Thai Bidding Firms: Are Takeovers in the Bidder's Interests?," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 9(04), pages 509-531.
    • Handle: RePEc:wsi:rpbfmp:v:09:y:2006:i:04:n:s0219091506000847
    DOI: 10.1142/S0219091506000847
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    References listed on IDEAS

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    1. Zingales, Luigi & Dyck, Alexander, 2002. "Private Benefits of Control: An International Comparison," CEPR Discussion Papers 3177, C.E.P.R. Discussion Papers.
    2. C Conn & A Cosh & P Guest & A Hughes, 2001. "Long-Run Share Performance of UK Firms Engaging in Cross-Border Acquisitions," Working Papers wp214, Centre for Business Research, University of Cambridge.
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    Cited by:

    1. Tatyana Sokolyk, 2015. "Governance provisions and managerial entrenchment: evidence from CEO turnover of acquiring firms," Review of Quantitative Finance and Accounting, Springer, vol. 45(2), pages 305-335, August.
    2. Jeffrey Harrison & Matthew Hart & Derek Oler, 2014. "Leverage and acquisition performance," Review of Quantitative Finance and Accounting, Springer, vol. 43(3), pages 571-603, October.
    3. Dimitris Andriosopoulos & Leonidas G. Barbopoulos, 2017. "Relative equity market valuation conditions and acquirers’ gains," Review of Quantitative Finance and Accounting, Springer, vol. 49(3), pages 855-884, October.
    4. Tomas Mantecon & Paul Thistle, 2011. "The IPO market as a screening device and the going public decision: evidence from acquisitions of privately and publicly held firms," Review of Quantitative Finance and Accounting, Springer, vol. 37(3), pages 325-361, October.

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    More about this item

    Keywords

    Thai takeovers; bidding firms; control portfolios; bootstrappedt-tests;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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