Title

Does abnormal bid premium matter to the market? evidence from UK

Abstract/Description

This study investigates ‘abnormal bid premium’ according to Bates and Becher (2017) with firm’s governance characteristics in bid premium settlement, market reaction in the short term of the combined firm from both bidder and target sides to develop a comprehensive perspective on the variable of interest. Study is on sample of UK publicly listed firm merger announcements made from 1995 to 2012 with hand collected governance data. Short term market reaction is proxied by (CAR) cumulative abnormal return computed around merger announcements utilizing standard event methodology. Utilizing abnormal bid premium proxy has evidenced that firm’s governance characteristics influences bid premium settlement. Furthermore, market reaction to abnormal bid premium provides an insight into the priorities of target and bidder shareholders during merger announcements. Finally, this study evidence that abnormal bid premium is a valid measure for abnormal bid premium quality for UK corporate takeover market.

Track

Accounting, Law, and Finance

Session Number/Theme

Session 3A

Session Chair

Dr. Riffat Mughal, Shaheed Zulfikar Ali Bhutto Institute of Science & Technology (SZABIST)

Session Discussant

Dr. Hilal Anwar Butt; Dr. Mohsin Sadaqat

Start Date/Time

24-6-2022 2:20 PM

End Date/Time

24-6-2022 2:40 PM

Location

Crystal Ball Room, Marriott Hotel, Karachi

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Jun 24th, 2:20 PM Jun 24th, 2:40 PM

Does abnormal bid premium matter to the market? evidence from UK

Crystal Ball Room, Marriott Hotel, Karachi

This study investigates ‘abnormal bid premium’ according to Bates and Becher (2017) with firm’s governance characteristics in bid premium settlement, market reaction in the short term of the combined firm from both bidder and target sides to develop a comprehensive perspective on the variable of interest. Study is on sample of UK publicly listed firm merger announcements made from 1995 to 2012 with hand collected governance data. Short term market reaction is proxied by (CAR) cumulative abnormal return computed around merger announcements utilizing standard event methodology. Utilizing abnormal bid premium proxy has evidenced that firm’s governance characteristics influences bid premium settlement. Furthermore, market reaction to abnormal bid premium provides an insight into the priorities of target and bidder shareholders during merger announcements. Finally, this study evidence that abnormal bid premium is a valid measure for abnormal bid premium quality for UK corporate takeover market.