Journal article
Anticipation, Acquisitions, and Bidder Returns: Industry Shocks and the Transfer of Information across Rivals
The Review of financial studies, v 24(7), pp 2242-2285
01 Jul 2011
Abstract
We document market anticipation of merger bids and show that less anticipated bids earn significantly higher announcement returns. Subsequent bidders in the industry experience significant and positive abnormal returns around the time of initial industry bid announcements. These results suggest that announcement period returns underestimate the wealth effects of bidding. After accounting for anticipation, bidding activity is, on average, a significant wealth-creating event. Moreover, bidders pursuing public targets increase shareholder wealth and bidders in stock swaps do not lose. These results contradict conventional wisdom. Our results shed light on the correct magnitude of acquisition returns and on the transfer of information throughout an industry around the time of an economic shock. (JEL G34, G14)
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Details
- Title
- Anticipation, Acquisitions, and Bidder Returns: Industry Shocks and the Transfer of Information across Rivals
- Creators
- Jie Cai - Drexel UniversityMoon H. Song - College of Business AdministrationRalph A. Walkling - Drexel University
- Publication Details
- The Review of financial studies, v 24(7), pp 2242-2285
- Publisher
- Oxford Univ Press
- Number of pages
- 44
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000292573800002
- Scopus ID
- 2-s2.0-79959694716
- Other Identifier
- 991019168414704721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics