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Professor Martin Bugeja

Biography

Martin Bugeja is a Professor of Accounting at UTS. Prior to joining UTS in February 2009, Martin held an academic position in the Discipline of Accounting at the University of Sydney (1997-2009). Martin’s current research interests focus on mergers and acquisitions, intangible assets, corporate governance and board of director compensation. His research has been published in international journals including the Journal of Corporate Finance, Journal of Business, Finance & Accounting; Pacific Basin Finance Journal and Accounting and Business Research. He has also published in leading Australian journals including Accounting and Finance and Abacus. He currently serves on the editorial board of Australian Accounting Review. Martin’s research has been funded by external research grants from the ARC (Discovery Grant), Centre for International Finance Regulation and AFAANZ. Prior to his academic career Martin worked in the banking industry as a financial and tax accountant.

Image of Martin Bugeja
Head of Accounting Discipline Group, Accounting Discipline Group
B. Ec (Hons) (USyd), M. Comm (USyd), PhD (USyd)
Fellow, CPA Australia
 
Phone
+61 2 9514 3743

Research Interests

Corporate governance, mergers and acquisitions, intangible assets, director compensation, director turnover.

Can supervise: Yes

Intermediate and advanced financial accounting.

Conferences

Bugeja, M. 2016, 'Choice of Acquisition form and the Post-takeover Employment of Target Firm Directors on the Acquiring Firm Board', Twenty-Thrird Annual Conference Multinational Finance Society, Stockholm, SWEDEN.
Bugeja, M., Ghannam, S., Matolcsy, Z.P. & Spiropoulos, H. 2016, 'Who joins a sinking ship and why? Some evidence on independent directors who join fraudulent firms.', AAA - Annual Meeting and Conference, American Accounting Association, New York.
Bugeja, M., Govendir, B., Matolcsy, Z. & Pazmandy, G.P. 2016, 'Is There an Association between Vice Chancellors' (University Presidents') Compensation and University Rankings in Australia?', AAA - Annual Meeting and Conference, American Accounting Association, New York.
Bugeja, M. & Loyeung, A.L. 2013, 'Acquisition date goodwill: Determinants and market reaction', British Accounting and Finance Association Annual Conference 2013, British Accounting and Finance Association, Newcastle, UK.
Lu, M., Bugeja, M. & Shan, Y. 2013, 'Cost stickiness in Australia', EAA 2013 36th Annual Congress, European Accounting Association, Paris, France.
Bugeja, M., Czernkowski, R.M. & Moran, D.V. 2012, 'Did IFRS 8 increase segment disclosures?', British Accounting and Finance Association Annual Conference 2012, British Accounting and Finance Association, Brighton, United Kingdom.
Bugeja, M. & Loyeung, A.L. 2012, 'Goodwill accounting and takeover premiums: pre- and post- IFRS', British Accounting and Finance Association Annual Conference 2012, British Accounting and Finance Association, Brighton, United Kingdom.
Bugeja, M., Matolcsy, Z.P. & Spiropoulos, H. 2012, 'Is there a gender gap in CEO compensation?', British Accounting and Finance Association Annual Conference 2012, British Accounting and Finance Association, Brighton, United Kingdom.
Czernkowski, R.M., Bugeja, M. & Moran, D.V. 2012, 'Did IFRS 8 increase segment disclosures?', 35th Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Ljubljana, Slovenia.
Loyeung, A.L. & Bugeja, M. 2012, 'Goodwill accounting and takeover premiums: pre- and post- IFRS', 35th Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Ljubljana, Slovenia.
Bugeja, M., Matolcsy, Z.P. & Spiropoulos, H. 2012, 'Is there a gender gap in CEO compensation?', 35th Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Ljubljana, Slovenia.
Bugeja, M., Czernkowski, R.M. & Moran, D.V. 2012, 'Did IFRS 8 increase segment disclosures?', AFAANZ Conference, AFAANZ, Melbourne, Australia.
Bugeja, M. & Loyeung, A.L. 2012, 'Goodwill accounting and takeover premiums: pre- and post- IFRS', American Accounting Association Annual Meeting and Conference on Teaching and Learning in Accounting, American Accounting Association, Washington, DC.
Bugeja, M., Czernkowski, R.M. & Moran, D.V. 2012, 'Did IFRS 8 increase segment disclosures?', American Accounting Association Annual Meeting and Conference on Teaching and Learning in Accounting, American Accounting Association, Washington, DC.
Bond, D.K., Bugeja, M. & Czernkowski, R.M. 2011, 'Auditors and the provision of takeover advice', British Accounting and Finance Association Annual Conference 2011, British Accounting and Finance Association, Birmingham, United Kingdom.
Bugeja, M., Patel, V.G. & Walter, T.S. 2011, 'The microstructure of Australian takeover announcements', Annual Conference of the Multinational Finance Society, Rome, Italy.
Bugeja, M., Matolcsy, Z.P. & Spiropoulos, H. 2011, 'Are women tougher and better negotiators? Some evidence on CEO compensation', AFAANZ Conference, AFAANZ, Darwin, Australia.
Bugeja, M. 2011, 'Takeovers and target firm financial distress', 2011 FMA European Conference, Financial Management Association International (FMA), Porto, Portugal.
Matolcsy, Z.P., Bugeja, M. & Spiropoulos, H. 2012, 'Women in senior business roles: evidence on two conjectures', 34th Annual Congress - European Accounting Association, European Accounting Association, Rome, Italy.
Bugeja, M., Matolcsy, Z.P. & Spiropoulos, H. 2011, 'Women in senior business roles: Evidence on two conjectures', British Accounting and Finance Association Annual Conference 2011, British Accounting and Finance Association, Birmingham, United Kingdom.
Bugeja, M. & Sinelnikov, K. 2011, 'Public versus private takeovers of stock exchange listed targets', 34th Annual Congress - European Accounting Association, European Accounting Association, Rome, Italy.
Czernkowski, R.M., Jain, R. & Bugeja, M. 2010, 'Impact of information asymmetry on takeovers', 33rd Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Istanbul, Turkey.
Czernkowski, R.M., Bugeja, M. & Jain, R. 2010, 'Information asymmetry and takeovers', British Accounting Association Annual Conference 2010, British Accounting Association Annual Conference 2010, British Accounting Association (BAA), Cardiff City Hall.
Bugeja, M., Czernkowski, R.M. & Jain, R. 2010, 'Information asymmetry and takeovers', American Accounting Association Conference on Teaching and Learning in Accounting, American Accounting Association (AAA), American Accounting Association, San Francisco, California.
Bugeja, M., Da Silva Rosa, R., Duong, L. & Izan, H. 2010, 'CEO compensation from M&As in Australia', American Accounting Association Conference on Teaching and Learning in Accounting, American Accounting Association (AAA), American Accounting Association, San Francisco, California.
Bugeja, M., Da Silva Rosa, R., Duong, L. & Izan, H. 2010, 'CEO compensation from M&As in Australia', 2010 AFAANZ Conference Website, Accounting and Finance Association of Australia and New Zealand Conference, AFAANZ, Christchurch, New Zealand, pp. 1-27.
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This paper investigates the extent to which Australian CEOs are compensated following the completion of mergers and acquisitions (M&A)with reference to the incentive alignment and managerial power perspective. Findings reveal that CEOs of acquiring ?rms receive signi?- cantly higher compensation in the year of completing M&As and one year after. This higher compensation is presented in all forms: bonus only, salary only, salary and bonus, and total compensation. It is also found that the incentive alignment and managerial power approach are not mutually exclusive and they both can have some degrees of explaining the variation of CEO compensation following mergers. We ?nd a positive correlation between CEO compensation and ?rm performance, and some measures of CEOs e?ort and skill in completing the deal. However, we observe that CEOs of bidding ?rms have signi?cantly lower bonus and total compensation if there is any entrenchment in the CEO governance process (i.e. CEO is also a chair of the board, or a member of the nominating committee). This result is sharply opposite to the US evidence (Gristein and Hribar (2004)) where CEO compensation after mergers is signi?cantly driven by CEO power. Overall our ?ndings are more consistent with the predictions of the incentive alignment theory rather than the managerial power theor
Bugeja, M. 2009, 'Takeover premiums and the perception of auditor independence and reputation', 2009 AFAANZ Conference, Accounting and Finance Association of Australia and New Zealand Conference, AFAANZ, Adelaide, Australia, pp. 1-41.
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This study investigates if there is a positive association between takeover premiums and the bidders perception of target firm auditor reputation and independence. Using auditor size as a proxy for auditor reputation, the results indicate that target shareholders receive a higher takeover premium when a Big 4 auditor audits the target firm in the year prior to the takeover announcement. This result is only significant however in the period prior to the highly publicised audit failures. The impact of perceived auditor independence on takeover premiums is studied using the levels and size of non-audit service (NAS) fees provided by the target firm auditor. Using three proxies for auditor independence, the results do not show an association between perceived auditor independence and takeover premiums. This finding is robust to partitioning the sample by auditor size, takeover hostility and splitting the sample into takeovers pre- and post- the corporate scandals that occurred in 2002.
Bugeja, M. & Da Silva Rosa, R. 2009, 'Capital gains taxation and target shareholder wealth in takeovers', Program American Accounting Association Annual Meeting, American Accounting Association Annual Meeting, American Accounting Association (AAA), New York.

Journal articles

Bugeja, M., Fohn, S. & Matolcsy, Z. 2016, 'Determinants of the levels and changes in non-executive director compensation', Accounting & Finance, vol. 56, no. 3, pp. 627-667.
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Bugeja, M., Matolcsy, Z. & Spiropoulos, H. 2016, 'The Association Between Gender-Diverse Compensation Committees and CEO Compensation', Journal of Business Ethics.
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© 2015 Springer Science+Business Media Dordrecht We examine the association between gender-diverse compensation committees and CEO pay and find that CEO compensation levels are negatively associated with gender-diversity of the compensation committee, but not gender-diversity of the board. Furthermore, we find that excess CEO compensation is negatively related to subsequent return on assets for firms with an all-male compensation committee but not for firms with a gender-diverse compensation committee. These results suggest that CEOs do receive some level of excess compensation which can be mitigated by having one or more females on the compensation committee.
Bugeja, M., da Silva Rosa, R., Izan, H. & Ngan, S. 2016, 'To scheme or bid? Choice of takeover method and impact on premium', Australian Journal of Management.
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Bugeja, M., Matolcsy, Z.P., Mehdi, W. & Spiropoulos, H. 2016, '(Forthcoming) Is non-executive directors' pay or industry expertise related to takeover premiums, abnormal returns and offer price revisions?', Australian Journal of Management.
Bugeja, M., Matolcsy, Z. & Spiropoulos, H. 2016, '(Forthcoming) The CEO Pay Slice: managerial power or efficient contracting? Some indirect evidence', Journal of Contemporary Accounting and Economics, vol. 12.
Bugeja, M., Patel, V.G. & Walter, T.S. 2015, 'The microstructure of Australian takeover announcements', Australian Journal of Management, vol. 40, no. 1, pp. 161-188.
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Using several microstructure variables, this study provides an intra-day examination of aggressive trading around Australian takeover announcements. We conduct this analysis for both target and bidding firms. We examine aggressive trading (i.e. by those who initiate the trade) using the abnormal behaviour of returns, trading volume, volatility and time-weighted spreads and depth. In addition, we develop a novel profit/loss measure (PLM) based on trade initiation and provide new evidence using the recently developed volume-synchronised probability of informed trading (VPIN) metric. In a univariate setting, these measures provide evidence of increased aggressive trading in Australian target firms. Further, after controlling for several microstructure variables, multivariate analysis reveals the presence of abnormally elevated time-weighted spreads prior to the announcement date for target firms. We show that VPIN is significantly elevated for target firms, especially in the four days prior to the takeover announcement.
Bugeja, M. 2015, 'The impact of target firm financial distress in Australian takeovers', Accounting and Finance, vol. 55, no. 2, pp. 361-396.
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Of the motives that have been advanced to explain corporate acquisitions, the least explored is the acquisition of a target experiencing financial distress. This study addresses this void by examining whether target firm financial distress is related to takeover: attitude, premiums, payment method, competition and outcome. Despite inconsistent findings across our distress measures the tenor of the results suggest that distressed targets receive higher premiums and are less likely to be offered cash consideration. Additionally, takeover completion is lower and takeover competition higher for targets in financial distress. Financial distress does not influence whether a takeover is hostile or friendly. © 2013 AFAANZ.
Bugeja, M., Czernkowski, R. & Moran, D. 2015, 'The Impact of the Management Approach on Segment Reporting', JOURNAL OF BUSINESS FINANCE & ACCOUNTING, vol. 42, no. 3-4, pp. 310-366.
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Bugeja, M., Lu, M. & Shan, Y.W. 2015, 'Cost Stickiness in Australia: Characteristics and Determinants', Australian Accounting Review, vol. 25, no. 3, pp. 248-261.
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© 2015 CPA Australia Ltd (CPA Australia). This study presents empirical evidence on cost stickiness using a large sample of Australian listed firms from 1990-2010. We find cost behaviour in Australian firms is sticky on average, with a lower degree of stickiness than in United States firms. Costs increase by 0.885% with a 1% increase in sales revenues, but decrease by only 0.797% for a 1% decrease in sales. The degree of cost stickiness demonstrates a 'U' shape over the period and increases after the adoption of International Financial Reporting Standards. Sticky cost behaviour, however, is not evidenced in the resources, construction and retail industries. We document evidence consistent with the argument of adjustment costs of employed resources, managerial incentives and agency costs. The degree of cost stickiness in Australia increases with a firm's asset and employee intensity, and when managers have strong incentives to avoid decreases in earnings or losses, but is less pronounced when revenues decline in the preceding period and in firms with strong governance mechanisms. Our results provide important implications for external stakeholders' understanding of firm performance.
Bugeja, M. & Loyeung, A. 2015, 'What drives the allocation of the purchase price to goodwill?', Journal of Contemporary Accounting and Economics, vol. 11, no. 3, pp. 245-261.
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© 2015 Elsevier Ltd. This study examines the proportion of the purchase price allocated to goodwill after the successful acquisition of a publicly listed firm. Using hand collected data we document that 42% of acquirers record a nil amount for goodwill. We find that the amount allocated to goodwill is generally unrelated to target firm economic characteristics. In contrast, consistent with managerial opportunism, we find a positive association between the use of accounting based bonus plans to compensate acquiring firm CEOs and the amount allocated to goodwill. The amount allocated to goodwill also increases after Australia adopted IFRS which no longer required goodwill to be systematically amortised. Other variables associated with goodwill recognition include the acquiring firm's leverage, the takeover premium, whether the target and the bidder operate in the same industry, existing goodwill in the target firm before the takeover announcement and the method of payment used in the acquisition.
Bond, D.K., Bugeja, M. & Czernkowski, R.M. 2012, 'Did Australian firms choose to switch to reporting operating cash flows using the indirect method?', Australian Accounting Review, vol. 22, no. 1, pp. 18-24.
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In 2007 Australian accounting standards were amended to allow a choice of presenting operating cash flows using either the direct or indirect method. This study investigates the number of ASX-listed entities that switched to the indirect format. Our results indicate that between 2007 and 2009 nine companies changed their reporting format. The firms adopting the indirect method have similar leverage, liquidity and performance to industry and size-matched controls. Given that previous research indicates that the direct method provides superior information for predicting cash flows and performance, our results will be welcomed by financial statement users and the Australian Accounting Standards Board.
Bugeja, M., Matolcsy, Z.P. & Spiropoulos, H. 2012, 'Is there a gender gap in CEO compensation?', Journal of Corporate Finance, vol. 18, no. 4, pp. 849-859.
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The gender pay gap generates significant political and social debate. This study contributes to this discussion by examining if a gender pay gap exists at the highest level of corporate management, the CEOs. While previous studies have documented a gender pay gap for most levels of executives the findings with respect to CEOs are conflicting. In this paper we focus only on CEO's as it is the most homogenous of executive roles and does not require us to assume that executives with similar titles undertake identical roles. Our evidence is based on 291 US firm-years for the period of 1998-2010. We do not find any association between CEO pay and gender using both the total sample and a sample matched using propensity scores to control for firm characteristics. These insignificant results hold for total pay, salary and bonuses, and for different matching procedures and econometric specifications. Our results therefore indicate that women who rise through the "glass ceiling" to the level of CEO are remunerated at similar levels to their male counterparts.
Bugeja, M. & Sinelnikov, K. 2012, 'Public versus private takeovers of Australian stock exchange listed targets', Australian Journal of Management, vol. 37, no. 3, pp. 391-414.
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In this study we investigate the association between bidding firm listing status and the abnormal returns and characteristics of target firms, in the context of Australian takeovers. Similar to the US, target abnormal returns are significantly lower in private bids. However, this difference is only significant when comparing public bidders with private non-operating bidders suggesting the results are driven by a lack of operating synergy available to non-operating bidders rather than public bidder agency problems. We also study how target firm characteristics differ between public and private bidders. The results indicate that different private bidders have alternative motivations for making an acquisition. Private equity targets have a less independent board than targets of public bidders and are more undervalued. In comparison, targets of private bidders without existing business activities are smaller, have higher management ownership, lower growth and lower cash flows than targets of public bidders.
Bugeja, M., Da Silva Rosa, R., Duong, L. & Izan, H. 2012, 'CEO compensation from M&As in Australia', Journal of Business Finance & Accounting, vol. 39, no. 9 & 10, pp. 1298-1329.
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We investigate Australian CEO compensation following mergers and acquisitions (M&As). We find CEOs of acquiring firms receive higher compensation in the year of M&A completion and one year after. We also find a positive correlation between CEO compensation and firm performance, and some measures of CEO effort and skill in completing the deal. However, CEOs of bidding firms receive a lower bonus and other compensation if they wield more managerial power (that is, if the CEO sits on the nominating committee, has a higher level of share ownership, or the board has more executive directors). This result is in sharp contrast to the US where compensation is influenced by CEO power. Overall our findings are more consistent with the predictions of the incentive alignment theory rather than the managerial power theory
Bugeja, M. 2011, 'Foreign takeovers of Australian listed entities', Australian Journal of Management, vol. 36, no. 1, pp. 89-107.
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This study examines if Australian target firm abnormal returns and characteristics differ between Australian and foreign bidders. The results indicate that takeovers from foreign bidders are associated with higher target firm abnormal returns than bids from Australian firms. Overseas bidders also pay an additional premium for research-intensive target firms. Target firms that receive an offer from outside Australia are significantly larger, have lower leverage, and are more likely to operate in the resources sector. Foreign acquisitions are also more likely to be a friendly takeover. The relative exchange rate is not associated with the likelihood of a foreign takeover. There is no difference in takeover success or competition between domestic and foreign bids.
Bugeja, M. 2011, 'Takeover premiums and the perception of auditor independence and reputation', The British Accounting Review, vol. 43, pp. 278-293.
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This study investigates if there is a positive association between takeover premiums and the bidders perception of target firm auditor reputation and independence. Using auditor size as a proxy for auditor reputation, the results indicate that in hostile takeovers target shareholders receive a higher takeover premium when a Big 4 auditor audits the target firm prior to the takeover. This result is only significant, however, in the period prior to the highly publicised audit failures. The impact of perceived auditor independence on takeover premiums is studied using the levels and size of non-audit service (NAS) fees provided by the target firm auditor. Using three proxies for auditor independence, the results show no association between perceived auditor independence and takeover premiums. This finding is robust to partitioning the sample by auditor size, takeover hostility and splitting the sample into takeovers pre- and post- the corporate scandals that occurred in 2002.
Bugeja, M. & Da Silva Rosa, R. 2010, 'Capital gains taxation and shareholder wealth in takeovers', Accounting & Finance, vol. 50, no. 2, pp. 241-262.
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Before December 1999, the capital gains of shareholders who sold their shares into Australian takeovers have been taxable irrespective of payment method. Subsequently, shareholders can elect to rollover capital gains in equity takeovers. We examine the effect of this change on the association between target shareholder capital gains and bidder and target firm shareholder wealth. The results indicate that prior to the regulatory change, cash consideration results in higher target shareholder returns for non-taxation reasons. After the introduction of capital gains tax rollover relief, we find that target and acquiring firm shareholders earn lower returns when cash consideration is offered to shareholders with greater capital gains.
Bugeja, M. 2009, 'Monitoring and the acquiring firm reaction to bad takeover bids', Corporate Ownership & Control, vol. 7, no. 2, pp. 208-223.
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This study investigates variables that explain why bidding firms raise their offer price following a negative capital market reaction to a takeover announcement. We find that whilst an increasing number of blockholders restrains the pursuit of unprofitable takeovers, greater institutional ownership and takeover hostility increases the likelihood a bidder will raise their offer price. Multiple bidders and board independence are unrelated to an increase in takeover price. Inconsistent with agency theory, management ownership and free cash flow do not explain bidder actions.
Bugeja, M., Rosa, R.D.S. & Lee, A. 2009, 'The Impact of Director Reputation and Performance on the Turnover and Board Seats of Target Firm Directors', JOURNAL OF BUSINESS FINANCE & ACCOUNTING, vol. 36, no. 1-2, pp. 185-209.
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Bugeja, M. 2009, 'Monitoring and the acquiring firm reaction to bad takeover bids', Corporate Ownership and Control, vol. 7, no. 2 B, pp. 208-223.
This study investigates variables that explain why bidding firms raise their offer price following a negative capital market reaction to a takeover announcement. We find that whilst an increasing number of blockholders restrains the pursuit of unprofitable takeovers, greater institutional ownership and takeover hostility increases the likelihood a bidder will raise their offer price. Multiple bidders and board independence are unrelated to an increase in takeover price. Inconsistent with agency theory, management ownership and free cash flow do not explain bidder actions.
Bugeja, M. & Da Silva Rosa, R. 2008, 'Taxation of shareholder capital gains and the choice of payment method in takeovers', Accounting and Business Research, vol. 38, no. 4, pp. 331-350.
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From December 1999, shareholders who disposed of shares in Australian takeovers in exchange for scrip could elect to defer capital gains taxation until the disposal of the shares received. We investigate payment method choice by acquiring firms before and after this regulatory change to assess whether target shareholder capital gains tax liabilities became an important factor considered in choosing the form of payment. The results show that, subsequent to the regulatory change, there is a significantly higher probability that equity will be offered as consideration where target shareholder capital gains are greater. This finding confirms the importance of shareholder level taxation in explaining corporate acquisition structure and adds to previous European and US evidence on factors associated with payment method choice in takeovers.
Bugeja, M. 2007, 'Voluntary use of independent valuation advice by target firm boards in takeovers', Pacific-Basin Finance Journal, vol. 15, no. 4, pp. 368-387.
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This study examines why target firm directors commission a voluntary expert to assess offer adequacy in Australian takeovers. The results indicate that expert use is higher where the board is rejecting the offer. In addition, experts are hired where the board faces greater complexity in valuing the consideration offered and the target firm. Expert use is found to be in target shareholders' interest as it increases the likelihood that the bidder will increase the offer price. These findings add to existing evidence on whether target board's act in shareholders' interest during corporate control contests.
Bugeja, M. & da Silva Rosa, R. 2007, 'The Influence of Target Shareholder Taxation on Premiums and Abnormal Returns in Takeovers'.
Prior to December 1999, shareholders that sold their shares into Australian takeovers have been taxable on capital gains irrespective of the form of payment. Subsequent to this date shareholders can elect to rollover gains when equity is received as consideration. We examine the effect of this regulatory change on the association between target shareholder capital gains and both takeover premiums and shareholder wealth. Inconsistent with the target shareholder taxation being important the results indicate that target shareholder capital gains are unrelated to takeover premiums and target firm abnormal returns. Additionally, we find that cash consideration increases target shareholder returns for reasons other than taxation.
Bugeja, M. 2006, 'Independent expert valuations in takeovers: Are they biased?', Australian Accounting Review, vol. 16, no. 2, pp. 19-24.
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The predictability of the opinions provided in expert reports produced in Australian takeovers has led repeatedly to public criticism. This study assesses the validity of this criticism by comparing expert valuations with the recommendations of target firm directors. The results indicate that expert valuations typically agree with directors' recommendations, with the rate of agreement being 95% for reject recommendations. Consistent with expert valuations provided in rejected takeovers being inflated, these bids are associated with similar premiums to accepted bids. Additionally, rejected offers that succeed do so at well below the expert's valuation, and prices in unsuccessful rejected offers do not increase towards the expert's valuation. Excluding bias, other possible explanations are that experts in rejected bids are genuinely over-optimistic about the prospects of these firms. Alternatively, these valuations may be structured to pressure the existing bidder into raising its offer, irrespective of whether it actually raises the price above their valuation. The results of this study are consistent with this strategy being successful, with the offer price being revised in 61% of rejected takeovers. Another possibility is that expert valuations in rejected bids are designed to encourage a competing bidder.
Bugeja, M. & Gallery, N. 2006, 'Is older goodwill value relevant?', Accounting and Finance, vol. 46, no. 4, pp. 519-535.
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Although previous research has generally found that goodwill reported in firms' financial reports is relevant to equity valuation, no known studies have directly examined whether the value-relevance of purchased goodwill holds as it ages. We examine this issue in the Australian context to determine whether the market attaches different values to the components of Australian firms' goodwill when it is disaggregated into different 'ages'. Our results suggest that recently acquired goodwill has information content whereas 'older' goodwill does not. Our findings have implications for goodwill accounting practice and recent changes to goodwill accounting standards
Bugeja, M. 2005, 'Effect of independent expert reports in Australian takeovers', Accounting and Finance, vol. 45, no. 4, pp. 519-536.
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The Corporations Law 2001 mandates the preparation of an expert report in circumstances where the bidder is perceived to have a superior bargaining position. The present study tests whether the findings in Eddey (1993) can be extrapolated to all bids, irrespective of payment method. Inconsistent with Eddey, the results indicate that target premiums are lower where an expert report is required. The results confirm a higher frequency of price revisions where an expert indicates that the offer is 'not fair'. However, this increased offer is insufficient to raise the price to the level in takeovers without expert reports.
Bugeja, M., Da Silva Rosa, R. & Walter, T.S. 2005, 'Expert reports in Australian takeovers: Fees and quality', Abacus: a journal of accounting, finance and business studies, vol. 41, no. 3, pp. 307-322.
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Target firms in Australian takeovers are required to commission the preparation of an independent expert report in circumstances where there is a perceived conflict of interest with the bidder. As approximately half of these reports are prepared by firms with which the target has other business dealings, concern has been expressed over the quality of these reports due to the suggestion that such reports are provided at lower fees. We examine the 191 independent expert reports provided in all 649 Australian takeover bids initiated in the period 1990 to 2000 inclusive. Using an expert-fee model, we find that the fees for reports by experts with other business dealings with the target are not lower than those of unrelated experts. In addition, the results indicate that experts with other dealings with the target provide reports with a significantly smaller valuation range, consistent with these reports being of higher, rather than lower, quality. Our findings are inconsistent with the U.S. and New Zealand experience of prohibiting audit firms from providing valuation advice in takeovers.
Bugeja, M. 2005, 'The 'independence' of expert opinions in corporate takeovers: Agreeing with directors' recommendations', Journal of Business Finance & Accounting, vol. 32, no. 9-10, pp. 1861-1885.
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The impact of non-audit services on auditor independence has been the recent focus of regulators worldwide. Using expert reports provided in Australian takeovers, this study investigates a context where the audit independence issue is reversed. As approximately a quarter of expert reports are prepared by the target firm's auditor, concerns have been expressed over the independence of the opinion provided. This paper finds that, relative to other experts, there is no difference in the rate at which experts with other business dealings with the target, including the target's auditor, provide an opinion that agrees with that of directors. However, the capital market reaction around the release of the report indicates that reports produced by auditors are viewed as non-independent.
Bugeja, M. & Walter, T.S. 1995, 'An empirical analysis of some determinants of the target shareholder premium in takeovers', Accounting and Finance, vol. 35, no. 2, pp. 33-60.
While a considerable amount of research in Australia, the United States and elsewhere shows that takeovers create value for target shareholders, there is relatively little research investigating the explanations for cross-sectional differences in the size of the premium paid to target shareholders. This paper tests various arguments proposed to explain some of the sources of this premium. One such explanation is the removal of inefficient target management. Takeovers have been recognised as a mechanism that allows management teams to compete for the right to manage corporate assets. We test the associations between bidder and target managerial ownership (proxied by director's holdings), the prior performance of the bidder and target and the size of the premium paid to target shareholders. Other potential influences on the premium include a reduction in the agency costs of free cash flow and the provision of financial slack or reserve borrowing capacity to the target firm by the bidder. Using a sample of seventy-eight Australian takeovers occurring between 1981 and 1989 our tests indicate that the provision of financial slack to the target is associated with a significantly higher premium, while high bidder ownership results in a significantly lower premium. The premium is found to be positively related to the performance of the bidder in the period prior to the bid. The tests disclose an association between the agency costs of free cash flow and the target premium which is inconsistent with the theory, and reveal only weak evidence that the takeover premium is higher when inefficient target management is removed.

Other

Bugeja, M., Ghannam, S., Matolcsy, Z. & Spiropoulos, H. 2012, 'Does Board Gender-Diversity Matter in M&A Activities?'.
Responding to the social recognition of the importance of corporate gender-diversity, the topic has evoked significant interest in academic literature. This paper contributes to the discussion by focusing on the economic consequences of board-gender diversity in M&A setting. Using sample of 649 acquisitions by U.S. publicly listed companies between 2001 and 2009, we find that that board gender-diversity has no effect on either the size of the bid premium or the strength of the market reaction to M&A announcements, however, it has a positive impact on the long-term performance of the acquirers. This finding is consistent with the literature that suggests that board gender-diversity leads to positive economic outcomes such as more 'optimal' compensation structures, higher informativeness of stock prices and enhanced earnings quality.