Disciplinary Corporate Takeovers: Evidence for Australia

Stuart Dullard and Kim Hawtrey ()
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Stuart Dullard: Ashurst, Sydney, Australia
Kim Hawtrey: BIS Shrapnel, Australia

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2012, vol. 15, issue 03, 1-22

Abstract: This paper tests the relationship between takeovers and poor management performance, known as the market discipline hypothesis. We create a proprietary new Australian dataset for this study by individually researching company reports for executive retention data. We assess takeover targets for pre-bid managerial inefficiency and find evidence that Australian target companies exhibit negative abnormal returns prior to takeover. In particular, we find that disciplinary targets underperform their non-disciplinary counterparts. Our tests take into account the difference between friendly and hostile takeovers, and the industry sector in which the target firm operates.

Keywords: Strategic takeovers; performance; management; efficiency; market (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S021909151250018X

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