Foreign Investors’ Trading Behaviors around Merger and Acquisition Announcements: Evidence from Korea

17 Pages Posted: 29 May 2019 Last revised: 11 Jan 2020

See all articles by Jin Young Yang

Jin Young Yang

Zayed University

Reuben Segara

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: May 5, 2019

Abstract

This study examines foreign investors’ trading behaviors around merger and acquisition (M&A) announcements in the Korean stock market (both KOSPI and KOSDAQ markets). We find evidence that foreign investors are more likely to buy target stocks with larger wealth effects on the KOSPI market. In contrast, our results reveal that both foreign and domestic investors are not able to identify target stocks with larger wealth effects on the KOSDAQ market. Further, we find that in response to M&A announcements, only foreign investors can find target stocks with greater subsequent returns on the KOSDAQ market, but not on the KOSPI market.

Keywords: Mergers and acquisitions, Trading behaviors, Foreign investors, Korean stock market

JEL Classification: G14, G15, G34

Suggested Citation

Yang, Jin Young and Segara, Reuben, Foreign Investors’ Trading Behaviors around Merger and Acquisition Announcements: Evidence from Korea (May 5, 2019). Finance Research Letters, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3382836 or http://dx.doi.org/10.2139/ssrn.3382836

Jin Young Yang (Contact Author)

Zayed University ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

Reuben Segara

University of Sydney Business School ( email )

Sydney
Australia
+61 2 9351 8790 (Phone)
+61 2 9351 6461 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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