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Merger Momentum and Market Valuations: The UK Evidence

Petmezas, D (2008) Merger Momentum and Market Valuations: The UK Evidence Applied Financial Economics, 18 (17). 1411 - 1423. ISSN 0960-3107

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Abstract

This study examines the effect of merger momentum on acquirer's returns both in the short and long-run. The focus is on high valuation markets and the source of momentum is investigated employing three different hypotheses: the neoclassical hypothesis, the hubris hypothesis and the investor sentiment theory. Evidence is provided that supports the investor sentiment (optimism) hypothesis since it is demonstrated that investors earn significant gains in the short run but returns are reversed in the long-run as initial expectations may not be fully met when combined firms’ accomplishments become known over time. The results are robust after controlling for several acquirer and deal characteristics

Item Type: Article
Additional Information: This is an electronic version of an article published in Applied Financial Economics, 18(17), 1411-1423 (2008). Applied Financial Economics is available online at http://www.tandfonline.com/toc/rafe20/current
Divisions: Faculty of Business, Economics and Law > Surrey Business School
Depositing User: Symplectic Elements
Date Deposited: 01 Mar 2012 11:41
Last Modified: 23 Sep 2013 19:05
URI: http://epubs.surrey.ac.uk/id/eprint/178680

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