Univ., Diss.--Frankfurt (Main), 2004. / Literaturverz. S. 459 - 485.

Thesis (M.B.A.)--University of Hong Kong, 1990.

Thesis (M. Phil.)--University of Hong Kong, 2002. / Includes bibliographical references (leaves 106-113).

This thesis presents an empirical investigation of the role of competition in determining (1) bidder firm behaviour in, and (2) the resulting valuation effects of, corporate takeovers. The study is based on the most comprehensive sample currently available of interfirm tender offers for publicly traded U. S. target firms during the period 1971-1990. Corporate takeover contests differ in complex ways with respect to the asymmetric information and bargaining environment, distributions of bidder reservation values and target share ownership, and information acquisition costs. There is substantial theoretical work examining the strategic role of the choice of payment method, bidder elimination and target management resistance, and of particular interest in this thesis, pre-bid acquisition of target shares ("toehold") and its impact on the subsequent tender offer price. Despite a voluminous empirical literature on corporate acquisitions, systematic evidence on the extent and role of bidder toeholds on bidding strategies is sparse. While the toehold has been shown to be prevalent in takeover contests, the extant empirical literature contains few results pointing to the strategic role suggested by theory. The lack of statistical significance may reflect a combination of small samples, weak experimental design, and biases in estimation. This thesis remedies the small sample problem by examining more than 1350 takeover contests in the U. S. from 1971 to 1990. The experimental design is improved by including a larger set of sample controls, and addressing the bias issue by estimating a set of equations which simultaneously determines the toehold and the takeover premium. The wealth effects of takeover contests are estimated as a function of toeholds, the number of bids/bidders, the outcome of the bid, and the target management response. Other empirical issues, including the effect of toeholds on the probability of target management resistance and emergence of a second bid in the contest, are also examined. Finally, a new econometric technique is developed for simultaneously estimating event probabilities and conditional expected event returns in order to determine whether entering the takeover auction, and responding to rival bids for the target shares, on average enhances the wealth of the initial bidders' shareholders.

No description available.

Takeovers play an important role in the economy as they serve to reallocate economic resources to more efficient uses and replace inefficient management. Unregulated takeover bids pose a threat to the interests of the target company shareholders. The legislature pays special attention to takeover bids to make sure that the bona fide interests of the target company shareholders are duly protected. This is the primary purpose of the takeover bid regulation in Ontario. The regulation is also aimed at ensuring the horizontal equity among target shareholders and the efficient functioning of the capital market. This thesis analyzes the present regulation of takeover bids in Ontario and argues that while the whole system of takeover bid regulation is consistent with the proclaimed purposes, there are two issues that fall out of the coherent structure. The restriction on free transferability of shares and the adoption by boards of directors of shareholder rights plans do not enhance the protection of target company shareholders and do not correspond to the proclaimed purposes.

There are two opposing views on the role of regulation of financial markets examined in the academic literature. There is a large body of evidence that suggests that the efficiency of capital markets in North America is in large part due to investors’ confidence in the regulatory system. However, the optimal level of regulation is debatable. We investigate several aspects of the regulation of capital markets by exploring effects of changes in listing requirements on exchanges on the quality of firms undertaking initial public offerings and the quality of firms that choose to go public via a reverse merger mechanism. In addition, we show that additional regulation and/or disclosure of trading activies of informed investors in tender offers may be warranted. We show that a gradual increase in listing requirements fails to prevent low quality firms from gaining access to public capital markets. Yet, differences in listing rules on uppers and lower tiers of exchanges create a dual listing regime, which allows higher quality firms to differentiate themselves. We observe migration of most of the reverse merger transactions to the over-the-counter market due to changes in the regulatory environment in 2001. We conclude that regulatory changes had broad negative effects on the reverse mergers market as these pushed reverse merger firms to a less regulated and more opaque marketplace. Separately, we examine the timing of reverse mergers. Our results suggest that two types of reverse mergers follow different timing patterns: private firms go public through merger with financially distressed firms when IPO windows are closed, whereas reverse takeovers in which the participating public company is a going concern are pro-cyclical to aggregate merger waves. Finally, we analyze tender offers over the period from 1993 through 2006 and establish a link between non-public information and informed investors’ strategic behaviour. Our findings call in question the effectiveness of disclosure mechanisms of trading by informed investors. We also note that uninformed traders can use market microstructure tools to expand their information set, thus increasing the speed of incorporation of new information into stock prices and increasing market efficiency. / Finance

This thesis presents an empirical investigation of the role of competition in determining (1) bidder firm behaviour in, and (2) the resulting valuation effects of, corporate takeovers. The study is based on the most comprehensive sample currently available of interfirm tender offers for publicly traded U. S. target firms during the period 1971-1990. Corporate takeover contests differ in complex ways with respect to the asymmetric information and bargaining environment, distributions of bidder reservation values and target share ownership, and information acquisition costs. There is substantial theoretical work examining the strategic role of the choice of payment method, bidder elimination and target management resistance, and of particular interest in this thesis, pre-bid acquisition of target shares ("toehold") and its impact on the subsequent tender offer price. Despite a voluminous empirical literature on corporate acquisitions, systematic evidence on the extent and role of bidder toeholds on bidding strategies is sparse. While the toehold has been shown to be prevalent in takeover contests, the extant empirical literature contains few results pointing to the strategic role suggested by theory. The lack of statistical significance may reflect a combination of small samples, weak experimental design, and biases in estimation. This thesis remedies the small sample problem by examining more than 1350 takeover contests in the U. S. from 1971 to 1990. The experimental design is improved by including a larger set of sample controls, and addressing the bias issue by estimating a set of equations which simultaneously determines the toehold and the takeover premium. The wealth effects of takeover contests are estimated as a function of toeholds, the number of bids/bidders, the outcome of the bid, and the target management response. Other empirical issues, including the effect of toeholds on the probability of target management resistance and emergence of a second bid in the contest, are also examined. Finally, a new econometric technique is developed for simultaneously estimating event probabilities and conditional expected event returns in order to determine whether entering the takeover auction, and responding to rival bids for the target shares, on average enhances the wealth of the initial bidders' shareholders. / Business, Sauder School of / Graduate

No description available.

This work is in the spirit of the literature on the understanding and analysis of the different forces that shape the takeover process. We focus on the strategic interaction among the raiders and we study their decision to enter the bidding for a target form in a context of asymmetric information. Each raider incurs a fixed takeover sunk. cost when she decides to enter the bidding. Therefore she wants to avoid bidding for the firm and losing the bid to a raider with a higher valuation. We analyze the Bayesian-Nash equilibrium in one-period, two-period and infinite period models where each raider decides whether and in which period to enter. This decision depends on the takeover cost, the target's reservation price and the distribution function of the raiders' valuations. We also consider the case where one of the raiders is a large shareholder and the role of management in maximizing the shareholders' interests. We find that raiders delay entry into the bidding when the takeover cost or the reservation price for the firm increase. Such an increase also implies a decrease in the probability of a takeover. If one of the raiders is a large shareholder, he will enter the bidding faster the bigger is the percentage of shares he owns in the target. The existence of a large shareholder will, however, discourage other raiders from entering. The shareholders of the target firm might benefit from an increase in the target's reservation price but they never profit from an increase in the takeover cost. We conclude with an empirical section that indirectly tests some of our model's implications. The results of our empirical work indicate that raiders enter the bidding faster when the management's reaction to the bid proves to be friendly. The premiums offered by the raiders and the size of the target test insignificant in determining the pre-bidding period. Finally we find that the existence of a large shareholder discourages other raiders from entry. However, the large shareholder has on average a longer pre-bidding waiting period than a raider with no ownership in the firm. / Ph. D.