Are investors compensated for their sophistication and informedness for company takeovers – An Australian study

Chris McAdam

Global Finance Journal, 2020, vol. 44, issue C

Abstract: I determine the sophistication and information level in takeovers for four investor classes which are individuals, nominees (fund managers), superannuation (pension) funds and incorporated companies. I also calculate their takeover returns. I find that the superannuation funds are informed and sophisticated; individuals are informed but unsophisticated; nominees are uninformed but sophisticated; and incorporated companies are uninformed and unsophisticated traders, and that the investors realise a return which is commensurate with their information and sophistication. This study improves on existing takeover return research which assumes, as a group, institutions are synonymously informed and sophisticated, and individuals are synonymously unsophisticated and uninformed.

Keywords: Trading behaviour; Individual investors; Takeover returns; Informed traders (search for similar items in EconPapers)
JEL-codes: D10 D89 G02 G10 G11 G34 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:44:y:2020:i:c:s1044028317301370

DOI: 10.1016/j.gfj.2018.08.002

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