Target industry takeover competition and the wealth effects of mergers and acquisitions: International evidence

Tanveer Hussain and Gilberto Loureiro

Journal of International Financial Markets, Institutions and Money, 2023, vol. 89, issue C

Abstract: This paper studies how target industry takeover competition affects shareholder gains around mergers and acquisitions (M&As). We find that target industries with higher M&A activity negatively (positively) affect bidder (target) announcement returns, while the impact on bidder-target combined returns is negligible. The results corroborate the overpayment argument of acquiring targets from competitive industries. Importantly, we document that the lower bidder announcement returns associated with higher industry takeover competition are mitigated when bidders are from countries with better institutional quality, suggesting that country governance can prevent bidder managers from overpaying the targets.

Keywords: Industry takeover competition; Mergers and acquisitions; M&A returns, corporate governance (search for similar items in EconPapers)
JEL-codes: D40 G34 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443123001336
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:89:y:2023:i:c:s1042443123001336

DOI: 10.1016/j.intfin.2023.101865

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Catherine Liu ().