Theories of merger and acquisitions (M&A) activity based on marketmisvaluation are supported by United States findings. We test the theoriesin Australia, where mandatory “delay and disclose” provisions arguablyreduce the scope for market misvaluation driven bids. We find that, as in theUnited States, Australian M&A activity clusters by industry and occurs inwaves but, unlike in the United States, cash bids predominate and theindustries with the highest incidence of stock bids do not exhibit greaterdispersion in their constituent firms’ valuations. Our analysis is consistentwith the “delay and disclose” provisions imposed on bidding firms by theCorporations Act 2001 (Cth) which substantially reduce the informationasymmetries that promote misvaluation in M&As.
|Journal||Company and Securities Law Journal|
|Publication status||Published - 2006|