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Journal articles on the topic 'Takeover premium'

Author: Grafiati

Published: 4 June 2021

Last updated: 1 February 2022

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1

Raad, Elias. "Why Do Acquiring Firms Pay High Premiums To Takeover Target Shareholders: An Empirical Study." Journal of Applied Business Research (JABR) 28, no. 4 (June 28, 2012): 725. http://dx.doi.org/10.19030/jabr.v28i4.7055.

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<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none; tab-stops: -.5in; mso-hyphenate: none;" class="MsoNormal"><span style="letter-spacing: -0.15pt; font-size: 10pt; mso-bidi-font-size: 12.0pt;"><span style="font-family: Times New Roman;">The purpose of this paper is to explore empirically the relationship between several factors reported in the literature to affect the premium received by takeover target shareholders. Using a sample of 190 successful takeovers during the period 1995-2005, our results suggest that high leveraged target firms' shareholders receive, on average, 13.34 percent more premium than stockholders of low leveraged target firms.<span style="mso-spacerun: yes;"> </span>Controlling for leverage, target firms which have high leverage and oppose the takeover receive significantly larger premiums than those with high leverage but do not oppose the takeover. Moreover, controlling for the size of managerial ownership in target firms, the association between leverage and premiums becomes more significant when managerial ownership is high and less significant when it is low.</span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

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2

Canil, Jean M., and Bruce A. Rosser. "How toeholds become footholds." Corporate Ownership and Control 4, no. 3 (2007): 25–41. http://dx.doi.org/10.22495/cocv4i3p2.

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We document empirical evidence that bidders tailor their takeover strategy when facing entrenched target managers. Key elements of a takeover strategy comprise the toehold purchase and the initial bid premium. We find that toeholds are acquired in cognizance of the principal outsider and target management block. Bidders’ free rider cost savings are measured by the product of the toehold and the initial bid premium. Several relationships are identified. Initial bid premiums for targets characterized by entrenchment are comparatively low and result in low free rider benefits to bidders. To avoid overpayment, bidders do not compensate entrenched managers for lost private benefits. Instead, in entrenchment scenarios toeholds are optimized with respect to the principal outsider as well as the target management block in order to create a foothold that neutralizes entrenchment. At the median toeholds match the spread between the principal outsider and the target management block in entrenchment scenarios, are about double the spread for shareholder-aligned targets and much smaller for owner-managed targets. Takeovers of owner-managed targets rely more on a higher offer price.

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3

Holmén, Martin, Eugene Nivorozhkin, and Rakesh Rana. "Do anti-takeover devices affect the takeover likelihood or the takeover premium?" European Journal of Finance 20, no. 4 (July 24, 2012): 319–40. http://dx.doi.org/10.1080/1351847x.2012.703141.

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4

Lin, Ji-Chai, and Yanzhi (Andrew) Wang. "The R&D Premium and Takeover Risk." Accounting Review 91, no. 3 (September 1, 2015): 955–71. http://dx.doi.org/10.2308/accr-51270.

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ABSTRACT To explain why firms with high research and development (R&D) intensity offer their investors higher stock returns, we argue that (1) high R&D capacity relative to firm valuation makes R&D-intensive firms attractive takeover targets, and that (2) the higher takeover probability leads their investors to face higher takeover risk, as proposed by Cremers, Nair, and John (2009), and require higher returns. We find evidence consistent with our hypothesis. Furthermore, we find that takeover probability also relates to large R&D increases, but not to innovation efficiency. Accordingly, we expect and find that takeover risk helps to explain the premium associated with large R&D increases, but not the innovation efficiency premium previously documented. JEL Classifications: G12; O31.

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5

Thraya, Mohamed Firas. "Are controlling shareholders extracting private benefits from European public acquisitions?" International Journal of Managerial Finance 11, no. 1 (February 2, 2015): 80–96. http://dx.doi.org/10.1108/ijmf-07-2012-0081.

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Purpose – The purpose of this paper is to examine the incentives of controlling shareholders in the market for corporate control. The author investigates the takeover premiums paid by a sample of European acquiring firms with voting rights structures that are highly concentrated. The results show a positive relationship between takeover premiums and the bidder’s concentration of both voting rights and excess voting rights over cash-flow rights. The author argues that with higher levels of entrenchment, takeover premiums reflect the private benefits of control which controlling shareholders in bidding firms seek to extract from a public transaction. Design/methodology/approach – This paper uses cross-sectional regression analyses to examine the relationship between takeover premiums and the extent to which bidding firm shareholders exert control as well as the arrangement which underlie this. The sample is composed by 210 deals. The data are collected from various databases (Thomson Financial’s Mergers and Acquisition; Faccio and Lang’s (2002); Datastream/Worldscope, LexisNexis). Findings – The premium paid in European M&A transactions is affected by the level of ownership exerted by the controlling shareholder. The results show premiums are positively and significantly associated with higher levels of voting rights, as well as, the level of separation of ownership and control when controlling shareholder ownership is low. Pyramiding structure seems to be the means of separation the most associated with takeover premiums. Research limitations/implications – This paper can be improved by other specifications. First, it would be interesting to analyze premiums paid by firms with dispersed ownership structure and to compare these premiums with those paid by firms with controlling shareholders. Second, the author suggests to examine whether a controlling shareholder occupy the seat of a CEO or a chairman. In these cases, the author assumes that the controlling shareholder can benefit from more discretion and can extract more private benefits. Third, the author suggests extending the sample period to 2007 at least to include the sixth wave. This wave was even more significant than the high-tech wave and has not been studied much. In these cases, the author assumes that the controlling shareholder can benefit from more discretion and can extract more private benefits. Originality/value – Previous studies show that the premium reflects the private benefits of control in privately negotiated transactions (mainly block transactions). In the present study, the author shows that the premium can also reflect private benefits in public merger transactions.

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6

Hanamura, Shinya, Kotaro Inoue, and Kazunori Suzuki. "Bidder and target valuation and method of payment of M&As in Japan: Evidence against the misvaluation-driven transactions." Corporate Ownership and Control 8, no. 3 (2011): 406–16. http://dx.doi.org/10.22495/cocv8i3c3p5.

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We analyze 377 takeovers that occurred in Japan between 2000 and 2007. Our focus is on the choice of payment method between cash and shares, the bidding premium, the market valuation of a bidder and a target, and the share price reaction. We relate the findings to the two complimentary theories of takeover motives; the Q-theory and the misevaluation theory. We have found that in Japan cash offers tend to occur when an acquirer and a target are highly valued on B/P basis, and when target’s size in terms of market cap. is larger relative to bidder’s size. The bidding premium tends to be higher when a bidder’s valuation is higher, when a target’s valuation is lower, and when target’s market cap. is smaller relative to bidder’s market cap. The choice of payment method (cash or stock) does not affect the bidding premium. Buyer’s CARs are higher when target’s market cap. is larger relative to bidder’s market cap. Target’s CARs are higher when a bidder’s valuation is higher, when a target’s valuation is lower, and when cash is used to pay for a takeover. Japanese takeover market was very small before the late 1990s and then quickly expanded in the 21st century, so that we are among the first to explore it. Our findings under the recent merger wave in Japan are in contrast with Dong et al. (2006), and are consistent with the Q-theory. We believe that the Japanese management has so far conducted a takeover based on managerial and strategic objectives. Our results also provide an explanation for the finding of Kang et al. (2000) and others who report that that on average a takeover announcement in Japan is greeted with positive share price reaction of both a bidder and a target.

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7

Das, Varsha. "The New Takeover Code by the Securities and Exchange Board of India." Journal of Social and Development Sciences 4, no. 7 (July 30, 2013): 303–7. http://dx.doi.org/10.22610/jsds.v4i7.765.

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Merger & Acquisition in India have been governed by the age-old takeover rules. It seems that now, the Securities and Exchange Board of India (SEBI) has realized that these rules need to be revamped to keep them in line with the ever-changing global scenario. On September 2011, the SEBI amended the new set of takeover rules i.e.; the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The main purpose is to prevent hostile takeovers and at the same time, provide some more opportunities of exit to innocent shareholders who do not wish to be associated with a particular acquirer. With these rules coming into force, both promoter and public shareholders of a listed company would now get the same price for their shares being purchased by an acquirer. In another shareholder-friendly move, SEBI has scrapped the noncompete fee or control premium, which were being paid to only the promoters earlier and could have been as much as 25% of the public offer price. The SEBI has successfully done one part of the reform process by preparing the new takeover code, the other part requires it successful implementation.

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8

Covrig, Vincent, Daniel L. McConaughy, and Mary Ann K. Travers. "Takeover Premia and Leverage: Theory, Empirical Observations and Recommendations." Journal of Business Valuation and Economic Loss Analysis 12, no. 1 (May 24, 2017): 123–39. http://dx.doi.org/10.1515/jbvela-2015-0002.

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AbstractThe greater a target company’s leverage, the less cash or shares an acquirer needs to control the target enterprise. Given the benefits of acquiring a target, the equity takeover premium is spread over relatively more assets in a more highly leveraged target, thus reducing the premium paid relative to the entire enterprise. This suggests that more levered targets may receive greater equity premia, expressed as a percent of the unaffected share price, other things equal. To test this, we examine takeover transactions that occurred during the 2003–2013 time period. We find that higher equity takeover premia are related to higher pre-deal leverage levels, consistent with theory. Our results are robust with respect to size, industry, profitability, year of transaction, synergy potential, and type of acquirer (strategic, horizontal or financial). Our empirical analyses support the Appraisal Foundation Working Group’s recommendation for best practices, namely, to adjust takeover premia for leverage.

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9

Pinto, Catarina, and Miguel Sousa. "Impact of double taxation treaties on cross-border acquisitions." Notas Económicas, no. 48 (June 14, 2019): 39–54. http://dx.doi.org/10.14195/2183-203x_48_2.

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In order to evaluate the impact of Double Taxation Treaties (DTTs) on the Foreign Direct Investment (FDI), we analysed the impact of a DTT implementation on both the number of cross-border acquisitions and the average value of M&A deals between companies from the countries that signed the DTT. Moreover, the impact of DTTs on the takeover bid premiums is analysed in order to access if companies are willing to pay higher premiums after the DTT is implemented and whether the impact on the premium is immediate or gradual. Overall, our findings lead us to conclude that DTTs effectively promote FDI.

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10

Bris, Arturo. "Toeholds, takeover premium, and the probability of being acquired." Journal of Corporate Finance 8, no. 3 (July 2002): 227–53. http://dx.doi.org/10.1016/s0929-1199(01)00055-4.

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11

Becker, Brian E. "Union Rents as a Source of Takeover Gains among Target Shareholders." ILR Review 49, no. 1 (October 1995): 3–19. http://dx.doi.org/10.1177/001979399504900101.

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This paper tests the hypothesis that the substantial gains enjoyed by shareholders in target firms during the corporate acquisition boom of the 1980s reflected, in part, shareholders' recouping of the value of “rents” (in the form of wage premiums, higher fringe benefits, and constraints on managerial authority) held by unionized labor. Analyzing data on the merger and acquisition experience of nearly 300 large publicly traded target firms during the period 1982–86, the author finds, consistent with that hypothesis, that shareholders' average returns from takeover activity were higher in unionized target firms (41%) than in nonunion target firms (35%). For unionized workers, these effects are equivalent to an annualized employee “loss” approaching 8% of annual earnings, or 50% of the wage premium conventionally associated with union coverage.

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12

Baradwaj, Babu G., David A. Dubofsky, and Donald R. Fraser. "Defensive acquisitions in the banking industry: The takeover premium hypothesis." Journal of Economics and Finance 20, no. 2 (June 1996): 13–21. http://dx.doi.org/10.1007/bf02920888.

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13

Ismail, Ahmad. "Do target firms always gain? The determinants of target firms loss in US takeovers." Corporate Ownership and Control 10, no. 1 (2012): 254–70. http://dx.doi.org/10.22495/cocv10i1c2art5.

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Studies that examine the profitability of mergers and acquisitions document that a considerable proportion (15-20%) of target firms earn negative returns. This study examines why the share price of the target firm reacts negatively to the announcement of some merger deals, while it reacts positively to others. We find that target firms that earn negative returns are less efficient, less profitable, receive a lower premium, are more likely to be paid with stocks, and attract less efficient acquirers than target firms that earn positive returns. The logistic regressions indicate that high relative size, low premium, higher target leverage, equity exchange offers, and mixed payment deals are associated with a higher likelihood of loss for the target firm. Fewer anti-takeover provisions for target firms are associated with a higher probability of loss, because such target firms, if necessary, are more likely to be disciplined by the market and be paid a low premium. Meanwhile, a high G-Index on the part of the acquirer is associated with negative target returns in share exchange offers if the premiums paid do not compensate for the acquirer excess risk.

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14

Sudarsanam, Sudi, and Ghulam Sorwar. "Determinants of Takeover Premium in Cash Offers: An Option Pricing Approach." Journal of Business Finance & Accounting 37, no. 5-6 (March 19, 2010): 687–714. http://dx.doi.org/10.1111/j.1468-5957.2010.02190.x.

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15

Dodonova, Anna, and Yuri Khoroshilov. "Private Value Takeover Auctions with Toeholds: An Experimental Study." Games 12, no. 2 (May 6, 2021): 40. http://dx.doi.org/10.3390/g12020040.

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This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory, we find a positive effect of toeholds on bidding. Such an effect, however, is of a lower magnitude and the bidding premium function has an opposite slope than the theory predicts, which can be attributed both to risk aversion and subjects’ tendency to think of their bids in relative terms. Consistent with the theory we find no cross-bidder toehold effect, however, such a result is inconsistent with the observed bidding function if people expect their opponents to behave the same way as they do.

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16

Bugeja, Martin, Raymond da Silva Rosa, HY Izan, and Susan Ngan. "To scheme or bid? Choice of takeover method and impact on premium." Australian Journal of Management 41, no. 2 (April 16, 2015): 212–43. http://dx.doi.org/10.1177/0312896214565120.

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17

Bugeja, Martin, Zoltan Matolcsy, Wassila Mehdi, and Helen Spiropoulos. "Is non-executive directors’ pay or industry expertise related to takeover premiums, abnormal returns and offer price revisions?" Australian Journal of Management 42, no. 3 (June 27, 2016): 355–75. http://dx.doi.org/10.1177/0312896216643566.

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We examine the association between various takeover outcomes and bidding firm non-executive directors’ (NEDs) compensation and expertise in the target firm industry. In our sample of 272 acquisitions by ASX listed firms between 2004 and 2011, we find that NEDs’ relative compensation and industry expertise have a negative association with the bid premium. We also find that NEDs’ relative compensation is positively associated with the bidding firm’s market reaction to the takeover announcement, and NEDs’ industry expertise is associated with a lower likelihood of an increase in the offer price, particularly for M&As viewed negatively by the market. These results are consistent with higher NEDs’ relative compensation and industry expertise leading to more effective board monitoring and advising.

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18

Marquette, Christopher J., and Thomas G. E. Williams. "Ownership of dual class shares and passive investment strategies." Corporate Ownership and Control 6, no. 1-2 (2008): 301–11. http://dx.doi.org/10.22495/cocv6i1c2p7.

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Previous studies of firms with two classes of stock find a price premium for the class with superior voting rights over the restricted voting rights shares. This premium changes over time and is related to the likelihood of a contested takeover attempt. These findings have implications for both passive and active investors. We find that for passive, buy-and-hold investors, restricted voting shares dominate superior voting shares in mean-variance space. This relationship also holds for a four factor model specification of stock returns. Our evidence indicates that passive, buy-and-hold investors can achieve a higher return with restricted vote shares than superior vote shares with no increase in either stand-alone or portfolio risk

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19

Stick, Henry, Carl Chen, and Steve Dawkins. "Restructuring Vs. Greenmail In the Market For Corporate Control: The Effect On Shareholder Wealth." Journal of Applied Business Research (JABR) 5, no. 2 (October 25, 2011): 56. http://dx.doi.org/10.19030/jabr.v5i2.6362.

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The effects of shareholder wealth of the payment of greenmail versus restructuring activities to thwart hostile takeover offers were investigated and illustrated in this study. The risk premium version of the market model was used to examine abnormal security price performance relative to an event announcement for selected sample sets of companies which have employed these defense techniques. The resulting company abnormal returns were summed cross-sectionally in event-time to obtain portfolio abnormal returns for use in hypothesis testing. Evidence from prior studies is first discussed to give some insight of the effects of merger activity, capital structure changes, and greenmail announcements on shareholder wealth. Research methods and results of this analysis are then presented. Based upon the comparison of these widely used anti-takeover tactics findings suggest that the payment of greenmail entrenches management at the expense of shareholder wealth, while restructuring activity to thwart hostile offers provides significant positive returns to shareholders.

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20

Ranganathan, Kavitha, and Poonam Singh. "Anchoring in Mergers and Acquisitions: Does the Regulatory Environment Matter?" Journal of Accounting, Auditing & Finance 36, no. 1 (September 9, 2018): 142–71. http://dx.doi.org/10.1177/0148558x18798998.

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We examine the 52-week anchoring effect in the Indian takeover market that has a unique regulatory design. The Indian takeover regulation mandates the minimum offer price to be function of the target’s 26-week or 60-day high price. We show that the 52-week anchoring effect is robust even in the face of other regulatory anchors that differ from the widely cited 52-week high price. The anchoring effect dominates when the offer price exceeds the 52-week high price. Regulatory intervention in 2011 that shifts the floor price to a recent market price, such as the 60-day high price, does not attenuate the 52-week anchoring effect. We infer that acquirers are willing to pay a higher premium while anchoring to the 52-week high price, even when the regulatory focus is on lower reference prices. Besides, regulatory anchors also serve as additional focal points, demonstrated by the significance of the 26-week high price during its own period of regulation (2002-2011).

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21

Li, Hao, Edward Jones, and Pierre de Gioia Carabellese. "Agency costs of board connections and director retention: evidence from UK takeovers." International Journal of Managerial Finance 16, no. 1 (June 14, 2019): 21–48. http://dx.doi.org/10.1108/ijmf-11-2018-0326.

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Purpose The purpose of this paper is to investigate whether ex ante board connections and director retention result in agency costs to target company shareholders in the form of reduced payment in mergers and acquisitions transaction. Design/methodology/approach The authors employ detailed data of ex ante board connection and director retention in the mergers and acquisition in the UK from 1999 to 2015. Ex ante board connections are measured as proportion of target and acquirer companies’ directors worked on the same board at any time prior to the takeover, while director retention is measured as proportion of target companies’ directors remains on board after the takeover is completed. For mergers and acquisition payment characteristics, the authors examine takeover premium, cash payment percentage and offer price adjustment. Findings The authors find that ex ante board connections and director retention lead to reduced offer prices and lower proportions of cash payment. Notably, when there is no connection and target directors are not retained, the authors find that the bidding companies increase their final offer by £14m more than in other scenarios. The authors also document strong evidence that ex ante board connections lead to a higher probability of director retention. Originality/value The paper highlights that ex ante board connections and director retention will lead to a significant cost on target company shareholders. The authors recommend that a more detailed set of information on ex ante board connections and intended target board retention should be disclosed.

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22

Labudovic, Jasmina. "Financial services with a special review of insurance services." Ekonomski anali 44, no. 161 (2004): 175–92. http://dx.doi.org/10.2298/eka0461175l.

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The aim of this paper is to point out certain characteristics of insurance market as a specific segment of financial services market. One of the characteristics of this market is the cost of insurance as differentia specific. The model presented in this paper shows how the insurer who is informed about the takeover risk can influence the cost of insurance. The development of insurance market indicates the development of national economies and the living standards. The data about the premium per capita national income per capita, the size of GDP and the number of citizens in different regions contain very interesting information. Processes of transition and macroeconomic reforms have led to a faster development of insurance in ex-socialist countries.

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23

Jovanovic, Boyan, and Serguey Braguinsky. "Bidder Discounts and Target Premia in Takeovers." American Economic Review 94, no. 1 (February 1, 2004): 46–56. http://dx.doi.org/10.1257/000282804322970698.

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On news of a takeover, the sum of the stock market values of the firms involved often falls, and the value of the acquirer almost always does. Does this mean that takeovers do not raise the values of the firms involved? Not necessarily. We set up a model in which the equilibrium number of takeovers is constrained efficient. Yet upon news of a takeover, a target's price rises, the bidder's price falls, and most of the time the joint value of the target and acquirer also falls.

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24

Nguyen, Duc Giang. "The endogeneity of poison pill adoption and unsolicited takeovers." International Journal of Managerial Finance 14, no. 1 (February 5, 2018): 23–36. http://dx.doi.org/10.1108/ijmf-04-2017-0075.

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Purpose Poison pill adoption is often considered as the most effective tactic to fend off an unsolicited takeover bid. However, it is difficult to identify the deterrent effect because the adoption is naturally endogenous. The purpose of this paper is to use plausibly exogenous instruments to mitigate the endogeneity problem. Design/methodology/approach The author employs two econometric models: the linear probability model and the bivariate probit model to examine the effect of poison pills on the outcome of a takeover. Findings Using a sample of 655 unsolicited takeovers, the author finds that poison pills substantially reduce the likelihood that a takeover bid, once undesirably placed, is completed. This negative impact strongly supports the manager entrenchment hypothesis in that managers adopt poison pills to ensure the continuation of their private benefits. However, the author finds no strong evidence consistent with the shareholder interest hypothesis that poison pills enhance the management’s ability to negotiate higher premiums or reject inadequate offers. Research limitations/implications The demise of the market for unsolicited takeovers with the disappearance of poison pills can be explained by the fact that poison pills, if adopted, will have an absolute deterrent effect on the takeover likelihood of success, and targets always have the power to adopt them instantly. Practical implications There should be policies to limit the power of managers to adopt poison pills because it causes the entrenchment problem which will negatively affect the firm value. Originality/value The author tackles the problem of the endogeneity of poison pill adoptions. The author shows that poison pills have a strong negative effect on the takeover outcome and the result can explain the decreasing number of unsolicited takeovers.

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25

BALAKIN, Il'ya A. "Influence of factors on the activity of financial and strategic buyers in leveraged buyouts." Finance and Credit 27, no. 4 (April 29, 2021): 913–33. http://dx.doi.org/10.24891/fc.27.4.913.

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Subject. This article examines the influence of factors on the activity of financial investors and strategic buyers in leveraged buyout transactions. Objectives. The article aims to clarify the dependence of the behavior of financial investors and strategic buyers on changes in various market conditions. Methods. For the study, I used a correlation analysis, logistic regression, comparison, and the abstract-logical and monographic methods. Results. The article identifies and describes differences in the behavior of the main types of buyers of debt financing transactions. Based on an analysis of leveraged buyout transactions in the euro area between 2002 and 2020, the article assesses the dependence of the relative contribution of financial investors and strategic buyers to the overall flow of transactions on the terms of debt and equity markets. Transaction-level analysis shows that differences in the behavior of financial investors and strategic buyers are due to differences in their propensity to make transactions in different market conditions and differences in adjustments to the volume of transactions they make, but are independent of the takeover premium they pay. Relevance. The results of the study contribute to a better understanding of the behavior of each type of buyout buyer, depending on changing market conditions.

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DeLisle, R. Jared, and Nathan Walcott. "The Role of Skewness in Mergers and Acquisitions." Quarterly Journal of Finance 07, no. 01 (February 21, 2017): 1740001. http://dx.doi.org/10.1142/s2010139217400018.

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Investors prefer stocks with idiosyncratic skewness in their returns, which may be evidence of behavioral biases. Previous research suggests that skewness is related to the choice of target in corporate acquisitions, which may reflect CEOs’ behavioral biases. However, if the acquiring firms’ stock returns are also skewed, then the acquirer CEOs may rationally use their stock as currency in these deals. We investigate the skewness of the acquiring firm and the method of payment to determine if takeovers involving high skewness stocks are consistent with shareholder wealth maximization. We find that firms with high levels of skewness are more likely to become takeover targets and that takeover premiums increase with skewness, but there is no relation between the target’s skewness level and acquirer announcement returns. We also find that acquirers with high skewness are more likely to pay with stock and have higher announcement returns. We conclude that acquirer CEOs often take advantage of investor preference for skewness when undertaking mergers and acquisitions activity.

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27

Lambe, Brendan John. "The efficacy of market abuse regulation in the UK." Journal of Financial Regulation and Compliance 24, no. 3 (July 11, 2016): 248–67. http://dx.doi.org/10.1108/jfrc-06-2015-0029.

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Purpose The purpose of this paper is to ascertain the efficacy of Financial Services and Markets Act (FMSA) (2000) in deterring illegal insider trading in target companies around the time of a merger and aquisition announcement. Design/methodology/approach The author uses an event study to measure the cumulative average abnormal returns (CAARs) around both the announcement and rumour date for a sample of UK takeovers between 2001 and 2010. Findings Statistically significant CAARs prior to the event date are observed across the sample. Research limitations/implications It is not possible to link unknown instances of illegal insider trading with pre takeover residuals, therefore explaining the residuals remains a deductive process. Practical implications Pre-event abnormal returns may indicate that trading on material nonpublic information is still a contributory factor in the run-up proportion of takeover premiums. Social implications This draws a question over the efficacy of the regulatory system. Originality/value This study provides evidence which points to insider trading activity ahead of Mergers in a post FMSA 200 UK context.

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28

Leitterstorf, Max Peter, and Maximilian Martin Wachter. "Takeover Premiums and Family Blockholders." Academy of Management Proceedings 2015, no. 1 (January 2015): 14399. http://dx.doi.org/10.5465/ambpp.2015.14399abstract.

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29

Leitterstorf, Max P., and Maximilian M. Wachter. "Takeover Premiums and Family Blockholders." Family Business Review 29, no. 2 (December 24, 2015): 214–30. http://dx.doi.org/10.1177/0894486515622721.

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Blockholders impact strategic firm decisions because they are better at monitoring managers than dispersed shareholder groups. Nevertheless, we do not sufficiently understand how preferences of different blockholder types impact strategic firm decisions. We discuss this in the context of takeover premiums offered for publicly listed firms. Prior studies have argued that managers are often tempted to offer excessively high premiums. Consistently, blockholders might better control managers and ensure lower premiums. To better understand the impact of blockholder preferences, we focus on the special case of family firms. Specifically, drawing on the behavioral agency model, we hypothesize that bidders with family blockholders offer lower premiums than bidders with other blockholders or bidders without blockholders. Our empirical results support our hypotheses based on a sample of 149 takeover offers.

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30

Nathan, Kevin S., and Terrence B. O'Keefe. "The rise in takeover premiums." Journal of Financial Economics 23, no. 1 (June 1989): 101–19. http://dx.doi.org/10.1016/0304-405x(89)90007-x.

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31

Chamberlain, Trevor, and Maxime Fabre. "Management Control and Takeover Premiums." International Advances in Economic Research 22, no. 4 (October 13, 2016): 471–73. http://dx.doi.org/10.1007/s11294-016-9606-8.

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32

Osborne, Anne C., and Danielle Sarver Coombs. "Enthusiasts, Invaders, and Custodians: Media Characterizations of Foreign Owners in Barclays Premier League." International Journal of Sport Communication 2, no. 3 (September 2009): 297–318. http://dx.doi.org/10.1123/ijsc.2.3.297.

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Abstract:

By the end of the 2007–8 season, non-Britons owned 9 of the 20 teams competing in England’s Barclays Premier League. Of these, 3—Manchester United, Aston Villa, and Liverpool—were purchased by Americans. This article examines how the British press covered foreign takeovers between the July 2003 purchase of Chelsea and the January 2008 sale of Derby County. The thematic analysis of articles written around the times of each takeover identified 3 dominant media characterizations of incoming foreign owners: the rich enthusiast, the foreign invader, and the savvy custodian. Each characterization is explored in terms of four key dimensions: commitment, authenticity, finances, and character myths. The study suggests that in addition to media making globalization possible insofar as they actually carry sports across the globe, media, particularly sports journalism, might facilitate globalization simply by not questioning it.

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33

Feijóo, Luis García, Margarita Kaprielyan, Jeff Madura, and Ariel M. Viale. "Target valuation complexity and takeover premiums." International Journal of Banking, Accounting and Finance 6, no. 2 (2015): 151. http://dx.doi.org/10.1504/ijbaaf.2015.077033.

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34

Mulherin, Harold, and Serif Aziz Simsir. "Measuring Deal Premiums in Takeovers." Financial Management 44, no. 1 (July 3, 2014): 1–14. http://dx.doi.org/10.1111/fima.12053.

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35

Eckbo, B. Espen. "Bidding strategies and takeover premiums: A review." Journal of Corporate Finance 15, no. 1 (February 2009): 149–78. http://dx.doi.org/10.1016/j.jcorpfin.2008.09.016.

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36

Chow, Travis, Kenneth J. Klassen, and Yanju Liu. "Targets' Tax Shelter Participation and Takeover Premiums." Contemporary Accounting Research 33, no. 4 (May 4, 2016): 1440–72. http://dx.doi.org/10.1111/1911-3846.12226.

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37

Gerritsen, Dirk F. "Security analysts’ target prices and takeover premiums." Finance Research Letters 13 (May 2015): 205–13. http://dx.doi.org/10.1016/j.frl.2015.01.002.

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38

Dombret, Andreas, Ferdinand Mager, and Timo Reinschmidt. "Global takeover premiums – country vs. industry impact." Applied Financial Economics Letters 4, no. 4 (July 25, 2008): 293–97. http://dx.doi.org/10.1080/17446540701720568.

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39

Rosett, Joshua G. "Do union wealth concessions explain takeover premiums?" Journal of Financial Economics 27, no. 1 (September 1990): 263–82. http://dx.doi.org/10.1016/0304-405x(90)90029-y.

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40

Dimopoulos, Theodosios, and Stefano Sacchetto. "Preemptive bidding, target resistance, and takeover premiums." Journal of Financial Economics 114, no. 3 (December 2014): 444–70. http://dx.doi.org/10.1016/j.jfineco.2014.07.013.

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41

Burkart, Mike, Denis Gromb, and Fausto Panunzi. "Minority Blocks and Takeover Premia." Journal of Institutional and Theoretical Economics 162, no. 1 (2006): 32. http://dx.doi.org/10.1628/093245606776166534.

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42

Stout, Lynn A. "Are Takeover Premiums Really Premiums? Market Price, Fair Value, and Corporate Law." Yale Law Journal 99, no. 6 (April 1990): 1235. http://dx.doi.org/10.2307/796737.

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43

Eckbo, B. Espen, and Herwig Langohr. "Information disclosure, method of payment, and takeover premiums." Journal of Financial Economics 24, no. 2 (January 1989): 363–403. http://dx.doi.org/10.1016/0304-405x(89)90052-4.

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44

Mülbert, Peter O. "Minority Blocks and Takeover Premia: Comment." Journal of Institutional and Theoretical Economics 162, no. 1 (2006): 50. http://dx.doi.org/10.1628/093245606776166525.

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45

Steiger, Eva-Maria. "Minority Blocks and Takeover Premia: Comment." Journal of Institutional and Theoretical Economics 162, no. 1 (2006): 53. http://dx.doi.org/10.1628/093245606776166624.

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46

Bessler, Wolfgang, and Colin Schneck. "Excess premium offers and bidder success in European takeovers." Eurasian Economic Review 5, no. 1 (April 25, 2015): 23–62. http://dx.doi.org/10.1007/s40822-015-0017-6.

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47

Shevlin, Terry. "Discussion of “Target's Tax Shelter Participation and Takeover Premiums”." Contemporary Accounting Research 33, no. 4 (June 4, 2016): 1473–88. http://dx.doi.org/10.1111/1911-3846.12227.

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48

(Jennifer) Wu, Szu-Yin, and Kee H. Chung. "Corporate innovation, likelihood to be acquired, and takeover premiums." Journal of Banking & Finance 108 (November 2019): 105634. http://dx.doi.org/10.1016/j.jbankfin.2019.105634.

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49

Burkart, Mike, Denis Gromb, and Fausto Panunzi. "Why Higher Takeover Premia Protect Minority Shareholders." Journal of Political Economy 106, no. 1 (February 1998): 172–204. http://dx.doi.org/10.1086/250006.

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50

Simonyan, Karen. "What determines takeover premia: An empirical analysis." Journal of Economics and Business 75 (September 2014): 93–125. http://dx.doi.org/10.1016/j.jeconbus.2014.07.001.

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