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    The probability of a firm making a takeover bid: An empirical analysis of Australian firms

    Access Status
    Open access via publisher
    Authors
    Akhtar, Farida
    Date
    2014
    Type
    Journal Article
    
    Metadata
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    Citation
    Akhtar, F. 2014. The probability of a firm making a takeover bid: An empirical analysis of Australian firms. Australian Journal of Management. 39: pp. 1-28.
    Source Title
    Australian Journal of Management
    DOI
    10.1177/0312896214534863
    ISSN
    0312-8962
    URI
    http://hdl.handle.net/20.500.11937/34201
    Collection
    • Curtin Research Publications
    Abstract

    This study develops a prediction model to investigate the probability of firms making a takeover bid. This model draws upon a number of firm characteristics, which can be categorized under three types of theory: agency costs, hubris behaviour and synergy motives. By examining a sample of 316 Australian publicly listed firms over the period 1999–2010, this study finds that bidding firms are significantly different from non-bidding firms in terms of their cash level, leverage, capital expenditure (long-term productivity growth) and management overconfidence level. Bidding firms are predisposed to enter into takeover activities because their management’s investment decisions are primarily driven by agency, hubris behaviour and synergy motives. The findings show that hubris behaviour is more dominant in influencing managers’ investment decisions in a takeover bid rather than agency or synergy motives.

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