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Introduction
1. Takeovers are one of the most important events in corporate finance, both for a firm and the
economy. Extensive research has shown that shareholders in bidding firms gain significantly and
that wealth is created at the announcement of takeovers i.e., combined bidder and target returns
are positive.
2. Our main focus is on examining the returns to acquirer’s i.e. large and small firms, making bids
for public, private, and subsidiary targets, using cash and stock, and seeing how the acquirers’
returns vary by these characteristics and the acquirer’s size. Our study enables us to provide new
evidence on what bidder returns tell us about takeovers. Therefore, our sample provides a fruitful
testing ground for probing the meaning of returns to acquirers.
References
Amihud, Yakov, Baruch Lev, and Nickolaos G. Travlos, 1990, Corporate control and the
choice of investment financing: The case of corporate acquisitions, Journal of Finance 45,
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Asquith, Paul, Robert F. Bruner, and David W. Mullins, Jr., 1983, The gains to bidding firms
from merger, Journal of Financial Economics 11, 121-140.
Barclay, Michael J., and Robert H. Litzenberger, 1988, Announcement effects of new equity
issues and the use of intraday price data, Journal of Financial Economics 21, 71-100.
Carlton, Willard T., David K. Guilkey, Robert S. Harris, and John F. Stewart, 1983, An
empirical analysis of the role of the medium of exchange in mergers, Journal of Finance 38,
813-826.
Dierkens, Nathalie, 1991, Information asymmetry and equity issues, Journal of Financial and
Quantitative Analysis 26, 181-199.
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