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Investor Recognition and Post‐Acquisition Performance of Acquirers.
- Source :
- Financial Review; Aug2018, Vol. 53 Issue 3, p569-604, 36p, 10 Charts, 2 Graphs
- Publication Year :
- 2018
-
Abstract
- Abstract: The literature has documented a negative relation between investor recognition and expected returns. This negative relation is consistent with the prediction in Merton (1987, Journal of Finance 42, 483–510). This paper investigates whether the changes in investor recognition of acquirers around the time of the acquisitions can explain the post‐acquisition underperformance of acquirer stocks. Using a large sample of U.S. acquisitions from 1980 to 2010, this paper finds that investor recognition, proxied by the number of institutional investors and the number of common shareholders, increases significantly during acquisitions. Once the increases in investor recognition are controlled for, the “puzzling” long‐run underperformances of acquirers disappears. [ABSTRACT FROM AUTHOR]
- Subjects :
- RATE of return
INVESTORS
INSTITUTIONAL investors
STOCKHOLDERS
CAPITAL investments
Subjects
Details
- Language :
- English
- ISSN :
- 07328516
- Volume :
- 53
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Financial Review
- Publication Type :
- Academic Journal
- Accession number :
- 130723872
- Full Text :
- https://doi.org/10.1111/fire.12166