Termination fees in a ‘bright line’ jurisdiction

Chapple, Larelle June, Christensen, Blake, & Clarkson, Peter (2007) Termination fees in a ‘bright line’ jurisdiction. Accounting and Finance, 47(4), pp. 643-665.

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We seek to statistically inform the debate regarding the Australian Takeovers Panel’s ‘bright line’ policy towards break fees. Based on 313 takeovers from 2002 to 2006, 85 involving break fees, we find post-bid competition to be unrelated to break fee usage and inversely related to bid success. We also find that break fee usage has a detrimental effect on shareholder wealth as measured by both the final bid premium and abnormal returns. Therefore, although break fees appear to be neither anticompetitive nor coercive within the Australian context, they do appear to have had a deleterious effect on shareholder wealth.

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6 citations in Web of Science®

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ID Code: 49310
Item Type: Journal Article
Refereed: Yes
Keywords: Termination fees, Break fees, Lock-up devices, Takeovers
DOI: 10.1111/j.1467-629X.2007.00228.x
ISSN: 0810-5391
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Deposited On: 23 Mar 2012 06:59
Last Modified: 23 Mar 2012 06:59

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