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Assessing Competition in The Market for Corporate Control: Australian Evidence

Author

Listed:
  • Philip Brown

    (Professor of Finance, University of Western Australia.)

  • Andrew Horin

    (Project Analyst, Wesfarmers Limited.)

Abstract

Ruback (1983) proposed a novel test of competition in the market for corporate control. He argued the market would be competitive if, in the context of two or more bidders, it did not pay an unsuccessful offeror to lift his bid to the successful offeror's price. Ruback's evidence was consistent with the American corporate acquisitions market being competitive, in this sense. We use Australian data to replicate Ruback's test. Our results mirror Ruback's, in that 58 out of 72 takeovers were consistent with a competitive Australian market. The 14 inconsistencies could have been due to bidder collusion, strategic behaviour, legal impediments, or quite possibly, confounding events.

Suggested Citation

  • Philip Brown & Andrew Horin, 1986. "Assessing Competition in The Market for Corporate Control: Australian Evidence," Australian Journal of Management, Australian School of Business, vol. 11(1), pages 23-50, June.
    • Handle: RePEc:sae:ausman:v:11:y:1986:i:1:p:23-50
    DOI: 10.1177/031289628601100103
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    References listed on IDEAS

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    Cited by:

    1. Grant Fleming, 2003. "Corporate Governance in Australia," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(3), pages 195-212.

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