Takeover deterrent effect of on-market share buyback in Australia

Doan, Dong Hai Trieu, Yap, Chee Jin and Gannon, Gerard 2011, Takeover deterrent effect of on-market share buyback in Australia, Australasian accounting business and finance journal, vol. 5, no. 4, pp. 65-84.

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Title Takeover deterrent effect of on-market share buyback in Australia
Author(s) Doan, Dong Hai Trieu
Yap, Chee Jin
Gannon, Gerard
Journal name Australasian accounting business and finance journal
Volume number 5
Issue number 4
Start page 65
End page 84
Publisher School of Accounting and Finance, University of Wollongong
Place of publication Wollongong, N. S. W.
Publication date 2011
ISSN 1834-2000
Keyword(s) share buyback
takeover deterrent
Summary This study examines whether Australian firms use on-market share buybacks to deter unwanted takeover risk. We found a statistically significant and positive relationship between a firm’s ex-ante takeover probability and its on-market share buyback activities. Our result is robust to alternative modelling techniques, namely TOBIT and Censored Quantile Regressions. This paper found evidence that in a dividend imputation credit taxation system the 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 to permanent operating cash flows. This might indicate that, besides dividend payments, Australian firms take advantage of the financial flexibility that comes with share buybacks to redistribute nonpermanent cash flows to their shareholders.
Language eng
Field of Research 159999 Commerce, Management, Tourism and Services not elsewhere classified
Socio Economic Objective 900101 Finance Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2012, Australasian Accounting Business and Finance Journal and Authors
Persistent URL http://hdl.handle.net/10536/DRO/DU:30041847

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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