TY - JOUR
T1 - The impact of institutional investors on mergers and acquisitions in the United Kingdom
AU - Andriosopoulos, Dimitris
AU - Yang, Shuai
N1 - .
NOTICE: This is the author’s version of a work that was accepted for publication in the Journal of Banking and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Banking and Finance, DOI: 10.1016/j.jbankfin.2014.06.004
PY - 2015/1/31
Y1 - 2015/1/31
N2 - In this paper we investigate the impact of institutional ownership on UK mergers and acquisitions. We employ a comprehensive sample of M&As conducted by UK acquirers from 2000 to 2010, thus including a full cycle of peak and trough in M&A waves. We find that institutional investors increase the likelihood of an M&A to be a large, cross-border deal, opting for full control. Moreover, institutional ownership concentration and foreign institutional ownership increase the likelihood of cross-border M&As. In addition, we assess the influence of institutional shareholders’ investment horizon and find that while investment horizon have a negative influence in encouraging cross-border M&As, the presence of long-term investors encourages larger M&As. Finally, even after controlling for the 2007-08 financial crisis the market reacts negatively to the announcement of cross-border M&As.
AB - In this paper we investigate the impact of institutional ownership on UK mergers and acquisitions. We employ a comprehensive sample of M&As conducted by UK acquirers from 2000 to 2010, thus including a full cycle of peak and trough in M&A waves. We find that institutional investors increase the likelihood of an M&A to be a large, cross-border deal, opting for full control. Moreover, institutional ownership concentration and foreign institutional ownership increase the likelihood of cross-border M&As. In addition, we assess the influence of institutional shareholders’ investment horizon and find that while investment horizon have a negative influence in encouraging cross-border M&As, the presence of long-term investors encourages larger M&As. Finally, even after controlling for the 2007-08 financial crisis the market reacts negatively to the announcement of cross-border M&As.
KW - institutional investors
KW - mergers and acquisitions
KW - cross-border
KW - investment horizon
KW - endogeneity
KW - financial crisis
UR - http://www.journals.elsevier.com/journal-of-banking-and-finance
U2 - 10.1016/j.jbankfin.2014.06.004
DO - 10.1016/j.jbankfin.2014.06.004
M3 - Article
SN - 0378-4266
VL - 50
SP - 547
EP - 561
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
ER -