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Corporate takeovers, method of payment, and bidding firms' shareholder returns: Australian evidence

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Abstract

This paper investigates the returns to the shareholders of the bidding firms in corporate takeovers. Previous studies have given inconclusive results and we believe this is a consequence of failing to control information or wealth transfer effects arising from the method of payment used in the acquisition. An event study was performed using recent Australian takeovers partitioned by method of payment. We found small significant positive abnormal returns to the shareholders of cash bidders and significant negative abnormal returns to the shareholders of bidders who used full or partial script offers.

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Author information

Authors and Affiliations

  1. Department of Commerce, University of Queensland and Manager, Australia

    David E Bellamy (Lecturer)

  2. SBC Dominguez Barry Corporate Finance, Australia

    Walter M Lewin

Authors
  1. David E Bellamy
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  2. Walter M Lewin
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Additional information

The authors thank the anonymous reviewers for their useful suggestions. This paper has benefited from financial assistance provided by the Department of Commerce of The University of Queensland.

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Bellamy, D.E., Lewin, W.M. Corporate takeovers, method of payment, and bidding firms' shareholder returns: Australian evidence. Asia Pacific J Manage 9, 137–149 (1992). https://doi.org/10.1007/BF01732892

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