Takeover deterrent effect of on-market share buyback

Doan, Dong Hai Trieu, Yap, Chee Jin and Gannon, Gerard 2009, Takeover deterrent effect of on-market share buyback, in PBFEAM 2009 & ICBA 2009 : Conference proceedings, School of Business, UTCC, Bangkok, Thailand.

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Title Takeover deterrent effect of on-market share buyback
Author(s) Doan, Dong Hai Trieu
Yap, Chee Jin
Gannon, Gerard
Conference name Pacific Basin Finance, Economics, Accounting and Management. Conference (17th : 2009 : Bangkok, Thailand)
Conference location Bangkok, Thailand
Conference dates 1-2 Jul. 2009
Title of proceedings PBFEAM 2009 & ICBA 2009 : Conference proceedings
Editor(s) [Unknown]
Publication date 2009
Conference series Pacific Basin Finance, Economics, Accounting and Management Conference
Publisher School of Business, UTCC
Place of publication Bangkok, Thailand
Keyword(s) buyback
open-market
take over deterrent
Summary This study examines whether Australian firms use on-market share buybacks to deter unwanted takeover risk from the stock market. We found a statistically significant and positive relation between a firm’s ex-ante takeover probability and its on-market share buyback activities. The result is robust to alternative modelling techniques, namely TOBIT and Censored Quantile Regressions. This could be partly explained by Brown and O’day (2007) hypothesis on dividend payout, that in a non-classical taxation system like Australia, yield of share buyback is positively related to dividend payments. However on-market share buyback activity is closely related to temporary cash flows rather than permanent operating cash flows. This might indicate that besides dividend payments, Australian firms might take advantage of the financial flexibility of share buybacks to redistribute non-permanent cash flows to their shareholders.
Language eng
Field of Research 140207 Financial Economics
Socio Economic Objective 900102 Investment Services (excl. Superannuation)
HERDC Research category E1 Full written paper - refereed
HERDC collection year 2009
Copyright notice ©2009, PBFEAM
Persistent URL http://hdl.handle.net/10536/DRO/DU:30020745

Document type: Conference Paper
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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