Does takeover competition affect acquisition choices and bidding firm performance? Australian evidence

We examine the influence of takeover competition on three acquisition choices: (i) public versus private target acquisitions; (ii) stock versus cash financed acquisitions; and (iii) related versus unrelated acquisitions. We find strong evidence of acquirers’ preference for public targets, stock swaps and business focus, in the face of takeover competition. Further, we find that the takeover competition has a positive influence on the bid premium paid to acquirer public targets and those financed with stock issues; competitive bids offered to acquire related targets are associated with significantly low bid premiums. In the short-term announcement window, competition-induced bids to acquire public targets and those financed with stock are penalised by the capital market. However, only stock-financed takeovers undertaken in a competitive takeover market show a long-run decline in performance of acquirers.     

The association between dividend payout and firm growth: Australian evidence

We report that whereas firms with high earnings distributions tend to have low‐to‐moderate growth (consistent with conventional theory), firms with low earnings distributions run the range between high and low performers. We interpret our findings for firm growth and payout policy in relation to the firm's location on the Boston Consulting Group (BCG) matrix that combines high/low growth with high/low market share. Our findings suggest that the market has difficulty in distinguishing between these types of firms. A concern is that investor preferences as an outcome may be focussed on dividend‐paying firms at the expense of younger growing firms in need of retained earnings.     

Causal and Dynamic Relationships among Stock Returns,Return Volatility and Trading Volume: Evidence from Emerging markets in South-East Asia

This paper examines the causal and dynamic relationships among stock returns, return volatility and trading volume for five emerging markets in South-East Asia—Indonesia, Malaysia, Philippines, Singapore and Thailand. We find strong evidence of asymmetry in the relationship between the stock returns and trading volume; returns are important in predicting their future dynamics as well as those of the trading volume, but trading volume has a very limited impact on the future dynamics of stock returns. However, the trading volume of some markets seems to contain information that is useful in predicting future dynamics of return volatility.     

Stock market volatility: friend or foe?

Although a good deal of research effort has been allocated to understanding the time-series volatility of stock returns – as both market (or systematic) volatility and idiosyncratic (or non-systematic) volatility – the relationship of such volatility with cross-sectional volatility or dispersion of outcomes is sparse. Nevertheless, the quest to understand one must involve the quest to understand the other. In this paper, we investigate the dispersion of returns in relation to inter-temporal volatility, as well as the dynamic of dispersion of returns in generating a portfolio’s return outcome. We find that the level of such dispersion is highly significant for portfolio performance and the notion of risk.     

Target's organisational form and returns to Australian bidders in cross‐border acquisitions

We present large sample evidence on return performances of Australian acquirers who bid for public and private targets in cross‐border acquisitions. While placing a particular emphasis on the method of payment and the shareholder protection offered by the target country, we analyse the impact of various bid, firm and foreign‐acquisition‐specific characteristics on bidding firms' abnormal returns. We find that Australian investors perceive cross‐border acquisitions as value‐creating exercises regardless of the organisational form of the target acquired. However, bidders for private targets earn higher return when the method of payment is stock and the targets are located in high investor protection countries. We further find that the abnormal returns are conditional to the relative size of the target, bid frequency, target country destination and the preacquisition financial performance of bidding firms.     

The post–announcement performance of dividend–changing companies: The dividend–signalling hypothesis revisited

This study revisits the dividend–signalling hypothesis by examining the post–announcement performance of U.K. companies which disclose dividend and earnings news to the capital market on the same day. For this purpose, we first analyse market–adjusted excess returns for three periods around the announcement and then examine the financial performance in the year of the announcement and in the subsequent five–year period. The near announcement excess returns and the announcement–year financial profiles provide strong evidence in support of the dividend–signalling hypothesis. However, in contrast to the predictions of the hypothesis, the longer–term results suggest that the companies which announce a reduction in both dividends and earnings (bad news companies) outperform their dividend–increasing counterparts.     

Australian Specific Bank Features and the Impact of Income Diversification on Bank Performance and Risk

Since financial market deregulation, Australian banks have significantly diversified from a dependence on simple products such as interest‐bearing loans to a broader range of financial products services. Such initiatives have transformed the structure of the Australian banking industry and are destined to receive scrutiny following the announcement of Australia's financial services inquiry. Against the common view that attempts by firms to diversify can be expected to impact negatively on financial performance, we find no strong evidence to suggest that diversification has been unfavourable to the performance of Australian banks. We find rather that Australia's banks have improved their risk‐return profiles as an outcome of diversification.     

The influence of the degree of state ownership and the ownership concentration on the performance of listed Chinese companies

This study investigates the influence of the degree of state ownership and ownership concentration on firm performance using annual data for 1034 companies listed on China's two exchanges for the period from 2000 to 2004. We find that, on average, the firms’ performance is negatively influenced by the state ownership. However, such a negative relationship is significant only at high levels of government ownership. Moreover, we find that a balanced ownership structure enhances the firm performance and there are indications of detrimental effects of block ownership.     

Board gender diversity and acquisition choices

We investigate the influence of gender diversity on the acquisition choices of bidding firms and find that firms with greater gender diversity are more likely to acquire nonlisted targets, use cash as the method of payment, and purchase firms in similar industries. Results show that these preferences are significantly influenced by female directors' financial expertise, target industry experience, mergers and acquisitions (M&A) experience, academic and professional qualifications, and networks. The percentage of female directors on boards is positively correlated with the market response to the announcement of acquisition choices preferred by female directors. Furthermore, bidders improve efficiency and accumulate long-term value gains through the contributions made by their female directors to these acquisition choices.