The valuation effects of investor attention in stock-financed acquisitions

Adra, S. and Barbopoulos, L. G. (2018) The valuation effects of investor attention in stock-financed acquisitions. Journal of Empirical Finance, 45, pp. 108-125. (doi: 10.1016/j.jempfin.2017.10.001)

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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. On the contrary, the 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.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Barbopoulos, Dr Leonidas
Authors: Adra, S., and Barbopoulos, L. G.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Journal of Empirical Finance
ISSN (Online):1879-1727
Published Online:19 October 2017
Copyright Holders:Copyright © 2017 Elsevier
First Published:First published in Journal of Empirical Finance 45:108-125
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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