What Factors Drive Takeovers in Australia?

International Journal of Business and Economics, Vol. 9, No. 2, pp. 87-103, 2010

17 Pages Posted: 21 Feb 2011

See all articles by Joshua Porter

Joshua Porter

Royal Automobile Club of Victoria (RACV) Limited

Harminder Singh

Deakin University - School of Accounting, Economics and Finance

Date Written: August 20, 2010

Abstract

We examine the relationships between the wealth changes associated with a takeover announcement to distinguish between three major competing motives-synergy, hubris, and agency. Empirical tests indicate that the synergy motive is the predominant explanation for the majority of takeovers in Australia; however, the evidence is consistent with the simultaneous presence of hubris in value-creating takeovers. The evidence also suggests agency, not hubris, is the primary motivation for the takeovers which result in value destruction.

Keywords: takeovers, synergy, agency

JEL Classification: G14, G34

Suggested Citation

Porter, Joshua and Singh, Harminder, What Factors Drive Takeovers in Australia? (August 20, 2010). International Journal of Business and Economics, Vol. 9, No. 2, pp. 87-103, 2010, Available at SSRN: https://ssrn.com/abstract=1765303

Joshua Porter

Royal Automobile Club of Victoria (RACV) Limited ( email )

Level 7
485 Bourke Street
Melbourne, Victoria 3000
Australia

Harminder Singh (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
211
Abstract Views
2,352
Rank
261,711
PlumX Metrics