Risks and returns of acquiring and acquired firms in Singapore: An empirical analysis

This paper investigates the risk profiles of target and acquiring firms and the impact of the takeover process on them. It was found that corporate takeovers generally increased the systematic risk of the acquiring firms after the event while lowering the systematic risk of the target firms. There were large and statistically significant returns obtained by the shareholders of the target firms due to the takeover event. The shareholders of the acquiring firms did not suffer any negative returns.The authors benefitted from the discussions at the Academy of International Business South-east Asia Regional Conference, 26–28 June 1986, where an earlier version of this paper was presented. The authors also like to acknowledge the financial support from the National University of Singapore.