Company Takeovers and Equity Returns: The Target Size Effect

Anderson D., Haynes A. and Heaney R. (1994) Company Takeovers and Equity Returns: The Target Size Effect. Australian Journal of Management, 19 1: 1-30. doi:10.1177/031289629401900101


Author Anderson D.
Haynes A.
Heaney R.
Title Company Takeovers and Equity Returns: The Target Size Effect
Journal name Australian Journal of Management   Check publisher's open access policy
ISSN 1327-2020
Publication date 1994-01-01
Sub-type Article (original research)
DOI 10.1177/031289629401900101
Open Access Status Not yet assessed
Volume 19
Issue 1
Start page 1
End page 30
Total pages 30
Subject 1400 Business, Management and Accounting
Abstract This paper examines the relationship between the size of a target and the market’s reaction to the announcement of a takeover offer. Using the constrained (0,1) market model to estimate abnormal returns, results from a sample of takeovers from 1984-88 indicate size effects for takeover targets at announcement date. While this outcome is consistent with both infor Mation asymmetry and liquidity explanations for the size effect, examination of the extent to which our whole-sample result is robust to a classification of the sample into sub-samples on the basis of outcome shows that the target size premium is explained by firms which are subject to a subsequent takeover. Sensitivity tests are conducted to establish the robustness of this result. We conclude that it is unlikely that a statistically significant target size effect is present in takeovers although the results are ambiguous.
Keyword SIZE ANOMALY
TARGET RETURNS
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Unknown

Document type: Journal Article
Sub-type: Article (original research)
Collection: Scopus Import - Archived
 
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Created: Tue, 30 Aug 2016, 14:07:22 EST by System User