Assessing Competition in The Market for Corporate Control: Australian Evidence

Philip Brown and Andrew Horin
Additional contact information
Philip Brown: Professor of Finance, University of Western Australia.
Andrew Horin: Project Analyst, Wesfarmers Limited.

Australian Journal of Management, 1986, vol. 11, issue 1, 23-50

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.

Keywords: TAKEOVERS; CORPORATE CONTROL; COMPETITIVE MARKET (search for similar items in EconPapers)
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:11:y:1986:i:1:p:23-50

DOI: 10.1177/031289628601100103

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