Conditional returns to shareholders of bidding firms

an Australian study

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This study examines the importance of the self-selection problem when evaluating returns to bidder firms around announcement events. Takeover announcements are not random because managers decide rationally whether to bid or not, which indicates announcements are timed; consequently, in the presence of the sample selection problem, standard ordinary least square estimates are biased. Using a conditional model, the results indicate that after controlling for the self-selection bias effect, shareholders of bidder firms make normal returns. In sum, failing to account for sample selection bias may lead to erroneous conclusions about a bidder’s true economic wealth effects around an announcement event.
Original languageEnglish
Pages (from-to)3-43
Number of pages41
JournalAccounting & Finance
Volume57
Issue numberSuppl. 1
DOIs
Publication statusPublished - 2017
Externally publishedYes

Keywords

  • sample selection bias

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