The Motivation for Takeovers in the UK

The Motivation for Takeovers in the UK

:  The motives for takeovers in the UK are investigated by examining the correlations between wealth gains for the target and both acquirer wealth gains and total wealth gains. The results are sensitive to whether the gains are measured over a long or short window, the method of measuring abnormal r...

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Bibliographic Details
Published in:Journal of business finance & accounting 2008-01, Vol.35 (1-2), p.102-126
Main Authors: Hodgkinson, Lynn, Partington, Graham H.
Format: Article
Language:eng
Subjects:
Abnormal returns
Agency
bid consideration
Bidding
Bids
Business management
Correlation analysis
hubris
Measurement
Motivation
motives
Studies
synergy
Take-overs
takeovers
Tender offers
United Kingdom
Wealth
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Summary::  The motives for takeovers in the UK are investigated by examining the correlations between wealth gains for the target and both acquirer wealth gains and total wealth gains. The results are sensitive to whether the gains are measured over a long or short window, the method of measuring abnormal returns, and whether controls are included for the form of the bid consideration and the sign of total bid gains. There is evidence of bids motivated by synergy, but there is also evidence of the presence of hubris and weak evidence of bids with an agency motivation. Once controls for bid consideration and the sign of total gains are introduced the explanatory power of the models increases substantially and diversity of results about bid motivation also increases.
ISSN:0306-686X
1468-5957