This paper has benefited from comments received from two anonymous referees and participants at the 2011 Financial Management Association European Conference.
The impact of target firm financial distress in Australian takeovers
Article first published online: 10 DEC 2013
© 2013 AFAANZ
Accounting & Finance
How to Cite
Bugeja, M. (2013), The impact of target firm financial distress in Australian takeovers. Accounting & Finance. doi: 10.1111/acfi.12062
- Article first published online: 10 DEC 2013
- Manuscript Accepted: 6 NOV 2013
- Manuscript Received: 30 AUG 2012
- Financial distress;
- Mergers and acquisitions;
Of the motives that have been advanced to explain corporate acquisitions, the least explored is the acquisition of a target experiencing financial distress. This study addresses this void by examining whether target firm financial distress is related to takeover: attitude, premiums, payment method, competition and outcome. Despite inconsistent findings across our distress measures the tenor of the results suggest that distressed targets receive higher premiums and are less likely to be offered cash consideration. Additionally, takeover completion is lower and takeover competition higher for targets in financial distress. Financial distress does not influence whether a takeover is hostile or friendly.