Disciplinary corporate takeovers

evidence for Australia

Stuart Dullard, Kim Hawtrey*

*Corresponding author for this work

Research output: Contribution to journalReview article

2 Citations (Scopus)

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.

Original languageEnglish
Article number1250018
Number of pages22
JournalReview of Pacific Basin Financial Markets and Policies
Volume15
Issue number3
DOIs
Publication statusPublished - Sep 2012
Externally publishedYes

Keywords

  • efficiency
  • management
  • market
  • performance
  • strategic takeovers

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