The market valuation of M&A announcements in the United Kingdom

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Andriosopoulos, Dimitris and Yang, Shuai and Li, Wei-an (2015) The market valuation of M&A announcements in the United Kingdom. International Review of Financial Analysis. ISSN 1057-5219 (https://doi.org/10.1016/j.irfa.2015.05.022)

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Abstract

This paper investigates the short-term market reaction to UK acquirers announcing domestic and foreign mergers and acquisitions (M&As) from 2000-2010. We define acquirers as value, moderate and glamour acquirers based on equally weighted market-to-book terciles. We find that value acquirers outperform glamour acquirers during and after the M&A announcement. We also focus on the impact of institutional ownership and find that higher domestic, foreign and total institutional ownership leads to lower market reaction to M&A announcements. We also find that long-term institutional investors lead to a higher post-announcement market performance. Finally, we find that a higher domestic institutional ownership mitigates the typical poor short-term performance following M&A announcements of glamour acquirers.

ORCID iDs

Andriosopoulos, Dimitris ORCID logoORCID: https://orcid.org/0000-0003-3033-2308, Yang, Shuai and Li, Wei-an;
CORE (COnnecting REpositories)