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| Tekijä: | Antoniou, A. Arbour, P. Zhao, H. |
| Otsikko: | How much is too much: Are merger premiums too high? |
| Lehti: | European Financial Management
2008 : MAR, VOL. 14:2, p. 268-287 |
| Asiasana: | stock returns event studies consolidation mergers |
| Vapaa asiasana: | merger premiums acquisitions |
| Kieli: | eng |
| Tiivistelmä: | It is asked if it is too much to pay target firm shareholders a 50 percent premium on top of market price etc. How much is too much? This paper investigates how the extent of merger premiums (henceforth as: m-prms.) paid impacts both the long-run (as: l-r.) and announcement period stock returns of acquiring firms. There is found no evidence that acquirers paying high m-prms. underperform those paying relatively low m-prms. in three years following mergers. The result is robust after controlling for a variety of firm and deal characteristics. Moreover, short term cumulative abnormal returns are positively correlated to the level of the premium paid by acquirers. Thus, the evidence suggests that high m-prms. paid are unlikely to be responsible for acquirers' l-r. post merger underperformance. |
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