The valuation effects of investor attention in stock-financed acquisitions

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The valuation effects of investor attention in stock-financed acquisitions. / Adra, Samer; Barbopoulos, Leonidas.

In: Journal of Empirical Finance, Vol. 45, 01.2018, p. 108-125.

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@article{d44db174634a4c929ea20a5fa45bcf84,
title = "The valuation effects of investor attention in stock-financed acquisitions",
abstract = "Limited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in their existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor attention do not experience significant announcement period wealth losses. However, the overvaluation of these acquirers is corrected in the post-announcement period. By contrast, overvalued acquirers that receive high investor attention and use stock as the payment method in their listed target acquisitions experience negative announcement period abnormal returns. The widely documented evidence that stock-financed acquisitions are associated with significant announcement period wealth losses is primarily driven by deals in which the acquirers are subject to high investor attention.",
keywords = "investor attention , corporate takeovers , payment methhod, acquirer abnormal returns",
author = "Samer Adra and Leonidas Barbopoulos",
year = "2018",
month = jan,
doi = "10.1016/j.jempfin.2017.10.001",
language = "English",
volume = "45",
pages = "108--125",
journal = "Journal of Empirical Finance",
issn = "0927-5398",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - The valuation effects of investor attention in stock-financed acquisitions

AU - Adra, Samer

AU - Barbopoulos, Leonidas

PY - 2018/1

Y1 - 2018/1

N2 - Limited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in their existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor attention do not experience significant announcement period wealth losses. However, the overvaluation of these acquirers is corrected in the post-announcement period. By contrast, overvalued acquirers that receive high investor attention and use stock as the payment method in their listed target acquisitions experience negative announcement period abnormal returns. The widely documented evidence that stock-financed acquisitions are associated with significant announcement period wealth losses is primarily driven by deals in which the acquirers are subject to high investor attention.

AB - Limited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in their existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor attention do not experience significant announcement period wealth losses. However, the overvaluation of these acquirers is corrected in the post-announcement period. By contrast, overvalued acquirers that receive high investor attention and use stock as the payment method in their listed target acquisitions experience negative announcement period abnormal returns. The widely documented evidence that stock-financed acquisitions are associated with significant announcement period wealth losses is primarily driven by deals in which the acquirers are subject to high investor attention.

KW - investor attention

KW - corporate takeovers

KW - payment methhod

KW - acquirer abnormal returns

U2 - 10.1016/j.jempfin.2017.10.001

DO - 10.1016/j.jempfin.2017.10.001

M3 - Article

VL - 45

SP - 108

EP - 125

JO - Journal of Empirical Finance

JF - Journal of Empirical Finance

SN - 0927-5398

ER -