The Share Market's Assessment of Initial Acquisitions by Seven Controversial Investors

Abstract

Recent years have seen an increase in takeover activity in the Australian share market. During this time several of the more active investors have been assigned the image of “corporate raider” by the media. This study looks at the share market reaction to seven such investors, namely, Lawrence Adler, Ron Brierley, Alan Bond, John Elliott, Lee Ming Tee, Robert Holmes à Court and John Spalvins. The findings are consistent with those of Holderness and Sheehan (1985). The evidence indicates that over the period 1981 to 1986, announcements of initial share acquisitions by these investors resulted in significant increases in the share price of the target firm. This is inconsistent with the raiding hypothesis. Some alternative explanations are discussed.