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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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. 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 |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| 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 |
| Publisher: | Elsevier |
| ISSN: | 0927-5398 |
| 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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