Asia Pacific Journal of Management

, Volume 11, Issue 2, pp 327–343 | Cite as

Can antitakeover activity really create wealth? Evidence from Australia

  • Scott Armstrong
  • Helen Lange
  • Li-Anne Woo
Articles
  • 48 Downloads

Abstract

This paper examines management-induced antitakeover activity which occurred in Australia in the late 1980s. The particular event studied is unique in Australia and requires shareholder approval to amend a company's Articles of Association to incorporate an antitakeover clause. The results show that there are strong positive wealth effects surrounding this management-initiated antitakeover activity, and that there is some evidence of a positive relationship between these abnormal returns and institutional holdings.

Keywords

Positive Relationship Abnormal Return Wealth Effect Institutional Holding Positive Wealth 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Agrawal, A and G N Mandelker, (1990), Large shareholders and the monitoring of managers: The case of antitakeover charter amendments,Journal of Financial and Quantitative Analysis 25/2, 143–161.Google Scholar
  2. 2.
    Baum, C and A Chakraborty, (1992), Anti-takeover amendments, managerial entrenchment and shareholders' interests,Boston College Working Paper, No. 220, September.Google Scholar
  3. 3.
    Bishop, S, P Dodd and R R Officer, (1987), Australian takeovers: The evidence 1972–85,The Centre for Independent Studies, Sydney, NSW.Google Scholar
  4. 4.
    Brickley, J A, (1986), Interpreting common stock returns around proxy statement disclosures and annual shareholder meetings,Journal of Financial and Quantitative Economics (September), 21/3, 343–349.Google Scholar
  5. 5.
    Brickley, J A, R C Lease and C W Smith Jr, (1988), Ownership structure and voting on antitakeover amendments,Journal of Financial Economics 20, 267–291.Google Scholar
  6. 6.
    Brown, S J and J B Warner, (1980), Measuring security price performance,Journal of Financial Economics 8, 205–258.Google Scholar
  7. 7.
    Brown, S J and J B Warner, (1985), Using daily stock returns — The case of event studies,Journal of Financial Economics 14, 3–31.Google Scholar
  8. 8.
    Casey, R S and P H Eddey, (1986), Defensive strategies of listed companies under the takeover code,Australian Journal of Management (December), 11/2, 153–172.Google Scholar
  9. 9.
    Crough, G J, (1980), Financial institutions and share ownership: A case study, in money, work and social responsibility (ed, G J Crough),Transnational Corporations Research Project, University of Sydney, 185–202.Google Scholar
  10. 10.
    DeAngelo, H and E M Rice, (1983), Antitakeover charter amendments and stockholder wealth,Journal of Financial Economics 11, 329–360.Google Scholar
  11. 11.
    Fama, E F, (1965), The behaviour of stock market prices,Journal of Business (January), XXXVIII, 34–105.Google Scholar
  12. 12.
    Fama, E F and M C Jensen, (1983), Separation of ownership and control,Journal of Law and Economics (June), XXVI, 301–325.Google Scholar
  13. 13.
    Hannes, S, (1985), The partial bid debate,Companies and Securities Law Journal (August), 3/3, 162–170.Google Scholar
  14. 14.
    Jarrell, G A and A B Poulsen, (1987), Shark repellents and stock prices — The effects of antitakeover amendments since 1980,Journal of Financial Economics 19, 127–168.Google Scholar
  15. 15.
    Linn, S C and J J McConnell, (1983), An empirical investigation of the impact of antitakeover amendments on common stock prices,Journal of Financial Economics 11, 361–399.Google Scholar
  16. 16.
    Malatesta, P H and R A Walkling, (1988), Poison pill securities,Journal of Financial Economics 20, 347–376.Google Scholar
  17. 17.
    Manne, H G, (1965), Mergers and the market for corporate control,Journal of Political Economy (April), 110–120.Google Scholar
  18. 18.
    O'Connell, A, (1987), Recent amendments and the takeovers code,Law Institute Journal (January–February), 61, 1/2, 50–52.Google Scholar
  19. 19.
    Pound, J, (1987), The effects of antitakeover amendments on takeover activity: Some direct evidence,Journal of Law and Economics (October), XXX, 353–367.Google Scholar
  20. 20.
    Pound, J, (1988), Proxy contests and the efficiency of shareholder oversight,Journal of Financial Economics 20, 237–265.Google Scholar
  21. 21.
    Pugh, W N, D E Page and J S Jahera Jr, (1992), Antitakeover charter amendments: Effects on corporate decisions,Journal of Financial Research 15:1, 57–67.Google Scholar
  22. 22.
    Shleifer, A and R W Vishny, (1986), Large shareholders and corporate control,Journal of Political Economy 94/3, 461–488.Google Scholar
  23. 23.
    Trotman, K, (1981), Takeover defences by Australian companies,Accounting and Finance (November), 63–85.Google Scholar

Copyright information

© Faculty of Business Administration National University of Singapore 1994

Authors and Affiliations

  • Scott Armstrong
  • Helen Lange
  • Li-Anne Woo

There are no affiliations available

Personalised recommendations