Title: An empirical investigation of 'change in control' motive of open offer announcement on shareholders' wealth of objective firms

Authors: Rajit Verma; Kulwant Kumar Sharma

Addresses: Chitkara Business School, Chitkara University, Punjab, India ' Chitkara Business School, Chitkara University, Punjab, India

Abstract: Corporate restructuring always plays an essential role to restore the financial health of many companies worldwide. In Indian context, open offer is a prominent tool in takeovers to safeguard the rights of minority shareholders. This study focuses on 'change in control' objective of open offer and its effects on the wealth of objective firm's shareholders. The present study used a sample of 96 offers which were based on 'change in control' objective during 2015-2017. The research is based on event study approach, ARs, and CAARs were used to analyse the effects of open offer on sample firms within the event window of 41 days. The results reflected that 'change in control' motive has significant positive impact on majority of companies in India with 22.38% cumulative estimation errors. The study concluded that if such an objective of an open offer can be anticipated well, then the investors can have a jackpot bonanza.

Keywords: open offers; event window; estimation window; shareholders' wealth.

DOI: 10.1504/IJBG.2021.112809

International Journal of Business and Globalisation, 2021 Vol.27 No.2, pp.220 - 230

Received: 01 Aug 2018
Accepted: 12 Dec 2018
Published online: 04 Feb 2021 *

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