What drives acquisitions? Market valuations and bidder performance
Petmezas, D (2008) What drives acquisitions? Market valuations and bidder performance Journal of Multinational Financial Management, 19 (1). pp. 54-74.
Given the recent theoretical development that documents stock market misvaluations’ driven acquisition, this paper examines the relation between market valuations and bidder performance. We focus on hot stock markets and find that bidder reactions to mergers, in both the short- and long-run period, are consistent with the predictions of investors’ sentiment (optimism) after controlling for target type and method of payment. Managers that undertake mergers during bullish periods are rewarded by the generalized upward trend of the market in the short-run. However, this is followed by long-term reversals as the market learns only gradually that many of the mergers undertaken during hot periods were not carefully evaluated and were made under the pressure of ‘urge to merge’ to take advantage of the overall market status of a particular period.
|Divisions :||Faculty of Arts and Social Sciences > Surrey Business School|
|Identification Number :||10.1016/j.mulfin.2008.05.001|
|Additional Information :||Copyright 2008 Elsevier. All rights reserved. NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Multinational Financial Management. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Multinational Financial Management, 19(1), 54-74, 2008. DOI:10.1016/j.mulfin.2008.05.001|
|Depositing User :||Symplectic Elements|
|Date Deposited :||01 Mar 2012 13:56|
|Last Modified :||23 Sep 2013 19:05|
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