DOES THE MARKET REACT DIFFERENTLY TO DOMESTIC AND FOREIGN TAKEOVER ANNOUNCEMENTS - EVIDENCE FROM THE UNITED-STATES CHEMICAL AND RETAIL INDUSTRIES

This paper examines shareholder wealth gains from domestic and foreign takeover announcements in the U.S. chemical and retail industries. Co ntrary to results in several recent papers, these data indicate there is no significant difference in within industry mean takeover premia l evels. There is evidence, though, that the sensitivity of takeover pre mia levels to standard transaction characteristics does differ across buyers: Foreign investors do pay more than domestic investors in hosti le transactions, but pay less when there are rival bidders. The result s indicate the market's reaction to buyer nationality is closely tied to the transaction's characteristics.