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Australian evidence on the determinants and impact of takeover resistance

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  • Krishnan Maheswaran
  • Sean Pinder

Abstract

In the present paper, we examine the determinants and impact of target bid resistance on the wealth of target shareholders and the takeover process in Australia. We find that bid resistance increases target shareholder wealth in the post‐announcement period and that the probability of bid hostility increases with the target's size, decreases with the target's performance and is unrelated to the size of the premium offered by the bidder. We also find that bid hostility decreases the probability of bid success, increases the probability of bid revision and has no effect on the probability of competing bidders entering the market.

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  • Krishnan Maheswaran & Sean Pinder, 2005. "Australian evidence on the determinants and impact of takeover resistance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(4), pages 613-633, December.
    • Handle: RePEc:bla:acctfi:v:45:y:2005:i:4:p:613-633
    DOI: 10.1111/j.1467-629X.2005.00140.x
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    References listed on IDEAS

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    1. Peter Holl & Dimitris Kyriazis, 1997. "Agency, Bid Resistance and the Market for Corporate Control," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 24(7‐8), pages 1037-1066, September.
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    7. Thosar, Satish, 1996. "Tender Offers and Target Management Responses: Managerial Entrenchment versus Stockholder Interest Revisited," The Financial Review, Eastern Finance Association, vol. 31(1), pages 87-104, February.
    8. G. William Schwert, 2000. "Hostility in Takeovers: In the Eyes of the Beholder?," Journal of Finance, American Finance Association, vol. 55(6), pages 2599-2640, December.
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    Cited by:

    1. Ben Lau & Alex Proimos, 2010. "The underperformance of equity‐financed bidders," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 6(1), pages 4-23, February.
    2. Shams, Syed M.M. & Gunasekarage, Abeyratna & Colombage, Sisira R.N., 2013. "Does the organisational form of the target influence market reaction to acquisition announcements? Australian evidence," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 89-108.
    3. Al Dah, Bilal, 2018. "Monitoring or empowering CEOs? The moderating effect of shareholder rights," Research in International Business and Finance, Elsevier, vol. 46(C), pages 502-515.
    4. Lien Duong & Izan H. Y. Izan, 2012. "Consequences of Riding Takeover Waves: A ustralian Evidence," International Review of Finance, International Review of Finance Ltd., vol. 12(4), pages 399-434, December.
    5. Faff, Robert & Prasadh, Shyaam & Shams, Syed, 2019. "Merger and acquisition research in the Asia-Pacific region: A review of the evidence and future directions," Research in International Business and Finance, Elsevier, vol. 50(C), pages 267-278.
    6. Martin Bugeja, 2011. "Foreign takeovers of Australian listed entities," Australian Journal of Management, Australian School of Business, vol. 36(1), pages 89-107, April.

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