MFIN6210 Assignment (2023 T2)
The assignment is due at 11pm on Monday 14 August 2023. Some of the questions should be very quick.
Question 3 might take more time [however, I was able to download the dataset, create the variables,
and run a basic regression within an hour. Thus, I know that it is doable within the time frame]. You can
do the assignment in groups of 4-5.
Length: There is no minimum page limit. Each of questions 1,2,3a, 3b, and 3c should be able to be
answered within one A4 page of paper. Thus, you should not exceed 5 a4 pages. Some you can answer
in less than one a4 page. This page limit does not include any tables you wish to include. For e.g., if you
wish to include a regression table (or tables) that does not count towards the page limit.
Questions
1. [7.5 marks] Choose a takeover for a company listed on the ASX by a company listed on the ASX.
The takeover must have occurred between 2015 and 2019. Evaluate whether the takeover
appears to have created value for the acquirer. Explain your reasoning behind how you have
evaluated the deal.
2. [7.5 marks] Choose a company listed on the ASX that is different from either the bidder or target
in your first question. Consider the firm’s corporate governance characteristics. Evaluate the
following: executive compensation and its design, the board of directors, the ownership
structure and owners, anti-takeover provisions and their presence. When evaluating those
characteristics indicate whether and how you would improve that area of corporate
governance.
3. [18 marks] You have a Stata dataset in moodle. This dataset contains data that looks at takeover
returns. It is a cross-sectional dataset. Answer the following:
a. [7.5 marks] How the target’s listing status and the method of payment impact acquirer
returns? Be sure to specify your regression specification and justify why you chose to
execute the regression in the manner you have.
b. [7.5 marks] Some prior literature has indicated that larger acquirers obtain worse
acquisition returns. Does this appear in your regression (be specific, based on your
regression output)? Discuss why this might be the case. There are prior studies on this
and you should be able to find these through appropriate searches.
c. [3 marks] The dataset does not have a full set of variables. Discuss which additional
variables you would include and why.
Notes on variables: Variables in the dataset include:
- CAR_Window_1_w01. Acquirer CAR (-5,5)
- CAR_Window_2_w01. CAR(-3,3)
- CAR_Window_3_w01. CAR(-1,1)
- lnat : natural log of the acquirer’s assets
- ch_at : acquirer’s cash/assets
- dltt_at : acquirer’s debt/assets
- xad_sale : acquirer’s Advertising / Sales
- xrd_sale : acquirer’s R&D/Sales
- intan_at: acquirer’s Intangibles/assets
- ebit_at : acquirer’s EBIT/Assets
- tobinq : acquirer’s Tobin’s Q
- competed : Competed deal indicator
- publictarget : Public target indicator
- somestock : Indicator for using some stock in the deal
- publictarget_somestock : Interaction of public target and stock indicators
- sellsidepe : Indicator for sell side PE activity
- buysidepe : Indicator for buy side PE activity
- tv_mktcap_w01: Transaction value / Bidder’s market cap
- The suffixes lead and lag refer to whether the variable is from the year after or before the
acquisition year, respectively