Share Structure And Wealth Effects Of Corporate Takeovers

Abstract

In this study we examine the stock price effects of corporate takeovers by dual class firms and unified firms. Our sample consists of 852 firms that were bidders in takeovers between 1993 and 2009. Our univariate and OLS regression results show that both dual class firms and unified firms obtain insignificant returns for various takeover announcement periods. The average and median returns for these two groups are similar to each other. We also identify several factors that the literature suggests should affect the bidder announcement returns in takeovers. Our results indicate that smaller firms in our sample and firms that pay for the acquisition in cash obtain higher abnormal returns when they announce the takeover. In addition, we find that the factors we identify have different influences on the announcement returns of dual class and unified firms. Specifically, unified firms that engage in tender offers and larger firms obtain more positive announcement returns compared to dual class firms whereas unified firms obtain more negative results when the target firm is a public firm.