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

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)

[thumbnail of Andriosopoulos-etal-IRFA-2015-The-market-valuation-of-M-and-A-announcements]
Preview
 Text. Filename: Andriosopoulos_etal_IRFA_2015_The_market_valuation_of_M_and_A_announcements.pdf
Accepted Author Manuscript
License: Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 logo
Download (1MB)| Preview

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.

CORE (COnnecting REpositories)