Neglected Peers in Merger Valuations

• 成果类型: Article
• 署名作者: Guo, Feng; Liu, Tingting; Tu, Danni
• 署名单位: Iowa State University; Southern Illinois University System; Southern Illinois University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhad004
• 发表日期: 2023
• 页码: 3257
• 关键词: ANALYSTS EARNINGS FORECASTS; investor inattention; corporate governance; horizontal mergers; REPORT READABILITY; TAKEOVER TARGETS; INFORMATION; returns; price; disclosure

摘要

Using novel merger valuation data, we show that firms selected by investment banks as comparable peers are more than twice as likely to later become takeover targets themselves compared to matched control firms. Peer firms not subsequently acquired attract more institutional ownership and analyst coverage, deliver strong operating performance, reduce investments, and increase payouts. Investors are inattentive, though, to peer identification at the time of merger filings' public disclosure. A portfolio that longs peers and shorts controls earns up to 15.6% alpha annually, which mainly comes from the long leg and is difficult to explain by short-sale constraints.