Acquirer reference prices and acquisition performance

• 成果类型: Article
• 署名作者: Ma, Qingzhong; Whidbee, David A.; Zhang, Wei
• 署名单位: California State University System; California State University Chico; Washington State University; California State University System; California State University Chico
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.10.004
• 发表日期: 2019
• 页码: 175-199
• 关键词: mergers; acquisitions; Anchoring; Reference point; Perceived valuation

摘要

In a comprehensive sample of mergers and acquisitions, we find a reference price effect: acquirers earn higher (lower) announcement-period returns when their pre-announcement stock prices are well below (near) their 52-week highs. This reference price effect is stronger in acquisitions of private targets, deals involving greater uncertainty, and acquirers with greater individual investor ownership, and it is reversed in the subsequent year. Further, acquirer reference prices affect bid premia and target announcement-period returns in deals with greater uncertainty in acquirer valuation. The overall evidence is consistent with investors irrationally using 52-week high prices as a measure of acquirer valuation. (C) 2018 Elsevier B.V. All rights reserved.