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Takeovers of newly public targets

Takeovers of newly public targets
Takeovers of newly public targets
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
0960-3107
1523-1530
Akhigbe, A.
5b99096b-9a1d-459a-9332-2e7b3f8b87e0
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Akhigbe, A.
5b99096b-9a1d-459a-9332-2e7b3f8b87e0
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4

Akhigbe, A., Jory, Surendranath and Madura, Jeff (2009) Takeovers of newly public targets. Applied Financial Economics, 19 (1), 1523-1530.

Record type: Article

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

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More information

Published date: 2009
Organisations: Southampton Business School

Identifiers

Local EPrints ID: 394341
URI: https://eprints.soton.ac.uk/id/eprint/394341
ISSN: 0960-3107
PURE UUID: 9822254d-668d-4bf9-9a11-b0520b21769e
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

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Date deposited: 13 May 2016 10:52
Last modified: 21 Aug 2019 00:32

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