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
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: Suggested Citation
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