Acquisitions and Technology Value Revision

64 Pages Posted: 12 Jun 2019

See all articles by Xiangshang Cai

Xiangshang Cai

University of Manchester - Alliance Manchester Business School

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group

Ning Gao

Manchester Accounting and Finance Group, Alliance Manchester Business School, University of Manchester

Ni Peng

Queen Mary University of London

Date Written: April 30, 2019

Abstract

Merger announcements cause upward revisions in the market value of target firms' technology peers, whether targets and their peers belong to the same industry or not. Firms having deeper technology overlaps with the targets experience more dramatic price revisions. Consistent with the acquisition probability theory, a firm is more likely to be taken over if at least one of its technology peers has been acquired recently, and peers more vulnerable to acquisitions have greater upward price revisions. Our findings demonstrate that the market for corporate control is an important information source to resolve the uncertainties in technology valuation.

Keywords: technological innovation, technology space, technology similarity, technology peers, merger, acquisition, information, valuation

JEL Classification: G14; G32; G34; D83; O33

Suggested Citation

Cai, Xiangshang and De Cesari, Amedeo and Gao, Ning and Peng, Ni, Acquisitions and Technology Value Revision (April 30, 2019). Available at SSRN: https://ssrn.com/abstract=3395394 or http://dx.doi.org/10.2139/ssrn.3395394

Xiangshang Cai

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group ( email )

Crawford House
Booth Street East
Manchester, M15 6PB
United Kingdom
+44 (0) 161 2754298 (Phone)

Ning Gao (Contact Author)

Manchester Accounting and Finance Group, Alliance Manchester Business School, University of Manchester ( email )

Booth Street East
.
Manchester, M13 9SS
United Kingdom

HOME PAGE: http://www.research.manchester.ac.uk/portal/Ning.Gao.html

Ni Peng

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

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