Returns to Acquirers of Listed and Unlisted Targets
Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Toulouse Business School - Economics and Finance
John J. McConnell
Journal of Financial and Quantitative Analysis, Forthcoming
We examine announcement period abnormal returns to acquirers of listed and unlisted targets in 17 Western European countries over the interval 1996-2001. Acquirers of listed targets earn an insignificant average abnormal return of -0.38%, while acquirers of unlisted targets earn a significant average abnormal return of 1.48%. This "listing effect" in acquirers' returns persists through time and across countries and remains after controlling for the method of payment for the target, the acquirer's size and Tobin's Q, pre-announcement leakage of information about the transaction, whether the acquisition created a blockholder in the acquirer's ownership structure, whether the acquisition was a cross-border deal, and other variables. The fundamental factors that give rise to this listing effect, which has also been documented in US acquisitions, remain elusive.
Keywords: Mergers and acquisitions
JEL Classification: G34Accepted Paper Series
Date posted: January 27, 2005
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