Takeovers of newly public targets

Akhigbe, A., Jory, S.R. and Madura, J. 2009. Takeovers of newly public targets. Applied Financial Economics. 19 (19), pp. 1523-1530.

TitleTakeovers of newly public targets
AuthorsAkhigbe, A., Jory, S.R. and Madura, J.
Abstract

While studies have documented that Initial Public Offering (IPO) aftermarket performance is weak, little is known about how the aftermarket performance is affected by takeovers of the newly public firms. We find that the aftermarket performance of IPOs is more favourable for those newly public firms that are acquired. Thus, the IPO aftermarket performance is weaker when removing targets and focusing on firms with continuing operations. We also find the primary reason for the difference in performance between the newly public firms that are acquired versus those that are not is the takeover premium. IPO firms with a lower market-book multiple, lower financial leverage and higher operating leverage can command higher premiums.

JournalApplied Financial Economics
Journal citation19 (19), pp. 1523-1530
ISSN0960-3107
Year2009
PublisherTaylor & Francis
Digital Object Identifier (DOI)doi:10.1080/09603100802599555
Publication dates
Published2009

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