Foreign Takeover Activity in the U.S. and Wealth Effects for Target Firm Shareholders

Cebenoyan, A. Sinan; Papaioannou, George; Travlos, Nickolaos G.

doi:10.2307/3666019

Cited by 64 publications

(47 citation statements)

References 23 publications

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“…Consequently, they would be willing to pay a higher premium than US bidders. Cebenoyan et al (1992), provide evidence that is broadly consistent with this hypothesis. Although we do not address this issue directly, we draw certain inferences below with regards to this point.…”

Section: Determinants Of Financing Choice and Target Premiumsupporting

confidence: 77%

Cross-listing and legal bonding: Evidence from mergers and acquisitions

Burns

Francis

Hasan

2007

Journal of Banking & Finance

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Section: Determinants Of Financing Choice and Target Premiumsupporting

confidence: 77%

Cross-listing and legal bonding: Evidence from mergers and acquisitions

Burns

Francis

Hasan

2007

Journal of Banking & Finance

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“…Almost every study shows that target shareholders gain at the armouncement of an acquisition. For international research on foreign firms buying U.S. targets, see Harris and Ravenscraft (1991), Cakici, Hessel, and Tandom (1991), Cebenoyan, Papaivannou and Travlos (1992), and Pettway, Sicherman, and Spiess (1993). 6.…”

Section: Discussionmentioning

confidence: 99%

Stockholder returns and international acquisitions of financial firms: An emphasis on banking

Hudgins

Seifert

1996

J Finan Serv Res

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The wealth effects for shareholders of American financial firms involved in foreign acquisitions and also the wealth effects for shareholders of U.S. target firms acquired by foreign concerns are the topics of this study. The findings indicate that stockholders of U.S. bidding financial firms (and its subset of banks) earn neither abnormal gains nor suffer abnormal losses upon the announcement of an acquisition or regulatory approval. On the other hand, stockholders of U.S. target financial firms (and its subset of banks) earn significant abnormal profits at both the announcement of the proposed acquisition and the announcement of regulatory approval of the acquisition. The wealth effects for these two samples are also compared to samples in which both parties to the acquisition are U.S. firms. The research suggests that there is no significant difference in the size of the announcement gains or losses for either stockholders of the target or bidding firms based on whether the acquisition is foreign or domestic. These findings conflict with prior research which indicates that, for firms in general, stockholders of U.S. targets earn significantly greater wealth benefits when they are acquired by foreign firms than by domestic firms. Overall, these results are consistent with a competitive market for acquisitions of financial firms in which buyers do not earn or lose at the announcement of an acquisition, and in which abnormal gains are received only by the sellers.

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“…Healy et al (1992), Cebenoyan et al (1992), and Lyroudi et al (1999) examined the post-merger performance of acquirers. They found a strong positive relation between increases in shareholder wealth of the targeting firms after merger and abnormal returns around the acquisition announcement date.…”

Section: Datamentioning

confidence: 98%