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

Dimitris Andriosopoulos, Shuai Yang, Wei-an Li

Research output: Contribution to journalArticle

5 Citations (Scopus)

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.
LanguageEnglish
JournalInternational Review of Financial Analysis
Early online date5 Jun 2015
DOIs
Publication statusPublished - 2015

Fingerprint

Market valuation
Announcement
Institutional ownership
Market reaction
Market performance
Book-to-market
Institutional investors
Mergers and acquisitions

Keywords

  • institutional ownership
  • domestic institutional ownership
  • institutional ownership turnover
  • mergers and acquisitions
  • glamour acquirers
  • value acquirers
  • announcement returns

Cite this

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title = "The market valuation of M&A announcements in the United Kingdom",
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.",
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The market valuation of M&A announcements in the United Kingdom. / Andriosopoulos, Dimitris; Yang, Shuai; Li, Wei-an.

In: International Review of Financial Analysis, 2015.

Research output: Contribution to journalArticle

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AB - 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.

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