WEALTH EFFECTS OF BUSINESS TAKEOVER ANNOUNCEMENTS: THE CASE OF AUSTRALIAN ACQUIRERS’ SHAREHOLDERS

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Abstract

Australia has accounted for over 51 percent of mergers and acquisitions in the Asia Pacific region (excluding Japan) during 2004-2006. This paper investigates the short-horizon and long-horizon wealth effects experienced by shareholders of Australian acquirers following these domestic and cross-border business takeover announcements. The sample consists of 197 announcements. Results for domestic acquisitions suggest that acquirers’ shareholders endure abnormal returns in the range of -1.07% and -1.86% per day in the short-horizon. The long-horizon wealth effects, however, were found to be inconclusive. Results for cross-border acquisitions show that acquirers’ shareholders endure abnormal returns in the range of 1.02% and 1.26% per day in the short-horizon. This positive wealth effect, however, dissipates in the long-horizon.

Keywords: Business Takeovers, Domestic and Cross-Border Acquisitions, Asia Pacific, Australia, Calendar Time Methodology

How to cite this paper: Perera, S., Wickramanayake, J., & Mehta, A. (2010). Wealth effects of business takeover announcements: The case of Australian acquirers’ shareholders. Corporate Ownership & Control, 8(1-8), 758-771. https://doi.org/10.22495/cocv8i1c8p2