1. Evaluate the company’s corporate governance. Qube’s governance framework provides the delegation of functions to Board Committees and senior management. Qube’s board consists six main directors which five of them are non-executive directors comprising Mr. Allan Davies as Chairman, Mr. Sam Kaplan as Deputy Chairman, Messrs. Ross Burney, Peter Dexter and Alan Miles as the non-executive directors. The Managing Director of Qube is Mr. Maurice James. At same time, the Board has established three Committees to assist with the effective discharge of its duties which are Audit and Risk Management Committee, Nomination and Remuneration Committee and Safety, Health and Environment Committee. We will discuss this board from independence, skills, compensation …show more content…
Consider that takeover that it did. Did the takeover create value? What could have driven that value-creation? My empirical approaches to test whether Qube’s takeover create value involves：(i)using regression to estimate alpha and beta in the estimation period(EP) （ii）calculating expected return of bidder only in given period. In order to assess the wealth effect of the proposed merger, I take two method(iii) abnormal return measuring and analyzing abnormal return. (Fama, 1976)(iv)calculate the continuously compounded daily return for Qube and ASX 200 index in acquisition period (iv) meanwhile, compute the Patell t-statistics correspond each abnormal return(AR) and cumulative abnormal return(CAR). The general formula of AR calculation is ARit = Rit -E(Rit)=Rit- (α ̂i + β ̂iRmt) (1) α ̂ and β ̂ are estimated alpha and beta from regression, they are -4.7*10^-4 and 0.93 respectively. I only focus on the major merger-related events and calculate abnormal returns in two-day’s window consisting of one trading day and event day. Fig.1 shows timeline of Estimation, negotiation and acquisition …show more content…
Qube’s horizonal integration plan will help to remove from competition then increases market share economies of scales. Secondly, Harford et al. (2012) state firms’ operating efficacy will be enhanced after takeover, and democracy companies have greater improvement. In previous question, we conclude Qube has good corporate governance which could lead to positive abnormal return. Thirdly, all cash payment method can result in a higher abnormal return than other two payment methods in an acquisition deal (Huang & Walking 1987), which is another reason to explain why Qube has a positive shareholder wealth effect. Finally, I suggest a three-year long-term event study could be implemented to examine wither this takeover create value in long