Abnormal Returns to Rivals of Acquisition Targets PDF Download
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Author: Moon H. Song
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Author: Moon H. Song
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Author: Gervais Arel
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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In the context of interconnected businesses and financial markets, we examine the competitive dynamics and the stock price discovery process of international acquisitions, and we measure its effects on the US market. To achieve this, we analyze a sample of large international and US acquisitions, and we compare its effects on the stock price abnormal returns of US-based rivals. This aims to improve our understanding of the information content of international mergers announcement. We observe that international and US target acquisitions generate positive abnormal returns to the US-based rivals, but the effect is statistically significant only for US target acquisitions. We also observe that international deals are related to lower abnormal returns to the US rivals during the run-up period. The abnormal returns to the rivals during the run-up period are positively related to the abnormal returns to the targets. Also, we observe that smaller deal values are associated with higher abnormal returns to the rivals during the run-up period. We do not identify statistical differences to the rival's stock price abnormal returns when targets are publicly listed vs unlisted. We highlight several deal-specific and firm-specific characteristics that are statistically significant to explain the abnormal return to the targets, but that are not significant to explain the abnormal returns to the rivals. These include: the acquirer public status, the proportion of cash in the transaction, the premium paid, the horizontal nature of the deal and the identification of the target as Initial Industry Target. The abnormal returns to the targets are consistent with previous studies. Targets of US and international acquisitions earn significant positive abnormal returns. US targets earn on average significant higher abnormal returns than international targets. Also, we observe that horizontal mergers are associated with higher abnormal returns to the targets than nonhorizontal mergers. Targets identified as Initial Industry Target realize significant lower abnormal returns. Finally, other deal-specific characteristics appear related to the abnormal returns to the targets, including the deal value, the acquirer public status, the proportion of cash in the transaction and the premium paid.
Author: Siyuan Ni
Publisher:
ISBN:
Category :
Languages : en
Pages : 65
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Book Description
In this paper I study the abnormal returns of different subsample of rival firms of takeover targets at their takeover announcement. Using latest data from 1990 to 2013, I confirm that rival firms earn positive and significant returns over target announcement period. Furthermore, after dividing the rivals into large rival portfolio and small rival portfolio, results show that the positive abnormal return is primarily earned by large rivals rather than small rivals. It is consistent with the hypothesis that large rival firms in the industry are expected to benefit more in the event of initial takeover, and large rivals are expected to become more competitive after initial merger, compared to relatively smaller rivals.
Author: B. Ruth Montgomery
Publisher:
ISBN:
Category : Business
Languages : en
Pages : 294
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Author: Yen-Sheng Huang
Publisher:
ISBN:
Category :
Languages : en
Pages : 22
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Abnormal returns earned by target firms at the time of initial acquisition announcements are related to form of payment, degree of resistance, and type of offer. Results indicate that interdependence among these characteristics is important. Previous research suggests that tender offer targets earn higher abnormal returns than merger targets. After controlling for payment method and degree of resistance, however, the difference in abnormal returns between tender offers and mergers is insignificant. Resisted offers are associated with insignificantly higher returns than unresisted offers. Abnormal returns associated with cash offers are significantly higher than those associated with stock offers.
Author: Isaac K. Otchere
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Globalization has led to an increase in cross-border mergers and acquisitions in recent years. Australian firms have featured prominently as acquisition targets in the latest merger wave. Cross-border acquisitions significantly affect industry dynamics and competitive balance. We investigate the intra-industry effects of cross-border acquisition of Australian firms and find, among others, that the target firms' rivals realized significantly positive abnormal returns following both the acquisition proposal and termination announcements. We relate our results to competing hypotheses and find evidence consistent with the acquisition probability hypothesis. Interestingly, we find that the abnormal returns earned by the rival firms at the time of the termination of the acquisition involving their industry counterparts were greater than the returns earned at the time of the acquisition proposal announcement. These results are consistent with the assertion that the likelihood of acquisition of the rival firms increases following the termination of the initial acquisition proposal involving their industry counterparts.
Author: Xiaoyang Sha
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
This paper examines the takeover rumour effects of potential U.S. acquisition targets on rival firms. On average, rival firms earn positive abnormal returns during the rumour period, despite the type and outcome of the rumour. Specifically, rumours concerning industry takeover activities and those regarding targets that undergo financial distress provide higher rival firm returns around the rumour date, while rumours that are seconded by analysts tend to lead to negative abnormal returns for rival firms. Rivals that subsequently become acquisition targets within one year following the rumour experience significantly higher abnormal returns. In related tests, we find that rumours proven to be credible, rumours denied by targets, rumours driven by insiders, rumours involving the PE finder, and rumours containing multiple informative signals are significant predictors of future rival acquisitions.
Author: Bjørn Espen Eckbo
Publisher: Academic Press
ISBN: 0123847451
Category : Business & Economics
Languages : en
Pages : 863
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Book Description
A selection of republished corporate finance articles and book chapters that can serve as an advanced corporate finance supplementary text for courses that use no textbooks. Combining convenience and an affordable price with retypeset pages and a high-quality index, the 600 pages of volume one, Takeover Activity, Valuation Estimates and Merger Gains, focus on classical issues such as the existence and source of merger waves, empirical estimates of takeover announcement returns and the division of takeover gains between bidders and targets, and tests for potential sources of takeover gains (primarily involving estimation of industry wealth effects of takeovers), introducing students to modern scientific evidence about corporate takeovers. Including an index and new introduction, this volume will simplify and facilitate students' interaction with new concepts and applications. - Provides a status report about modern scientific evidence on corporate takeovers - Exposes students to new methods and empirical evidence while reading high quality primary material - Offers a concise and cost-efficient package of journal and book articles for advanced corporate finance students
Author: Agnieszka Perepeczo
Publisher:
ISBN:
Category :
Languages : en
Pages : 18
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The paper provides evidence on abnormal returns performance in acquisitions on the Warsaw Stock Exchange. From a variety of measures, the authors chose the event study methodology, used in developed markets to evaluate post-acquisition performance and based on the market data, and Cumulative Average Abnormal Return (CAAR). The research sample has included acquired (target) firms quoted on the Warsaw Stock Exchange and selected according to the tender offers announcement in 1998-2004 as one of the formal ways of acquisition offer. The research study has focused on short-term abnormal returns (60 days before and 60 days after bid announcement). The evidence leads to the conclusion that positive reaction of investors to bid announcement on Polish market is similar to the reaction of investors on developed markets, and results in positive abnormal return for shareholders of acquired (target) firms. However the results obtained for individual sectors do not allow to draw unambiguous conclusions and indicate that abnormal returns for shareholders of acquired (target) firms are sensitive to the adopted model of evaluation.
Author: Abraham Charnes
Publisher:
ISBN:
Category : Airlines
Languages : en
Pages : 650
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