Investor Attention and Early Announcements in Mergers and Acquisitions

48 Pages Posted: 29 Nov 2022

See all articles by Chunling Xia

Chunling Xia

Queen Mary University of London

Yaz Gulnur Muradoglu

City University London - The Business School; Queen Mary University of London

Ni Peng

School of Business and Management, Queen Mary University of London

Huai Qin

Queen Mary University of London

Abstract

We provide an investor-attention-based interpretation for early announcements, complementing the signalling-based explanation of Aktas et al. (2018). We find that acquiring firms attract substantial investor attention with their early announcements. The positive relationship between early announcement and M&A short-term value effect is more pronounced for early-announced deals with greater investor attention toward deal announcements. However, this relation is reversed after merger integration, leading to a lower long-run firm value. For early-announced deals with low investor attention, neither the boosting effect of short-term value effect nor the price reversal in the long run exists. Our findings support the price pressure hypothesis for early announcements.

Keywords: Mergers, Acquisitions, Investor attention, Early announcement

Suggested Citation

Xia, Chunling and Muradoglu, Yaz Gulnur and Muradoglu, Yaz Gulnur and Peng, Ni and Qin, Huai, Investor Attention and Early Announcements in Mergers and Acquisitions. Available at SSRN: https://ssrn.com/abstract=4288783

Chunling Xia (Contact Author)

Queen Mary University of London ( email )

School of Business and Management
Mile End Road
London, E1 4NS
United Kingdom

Yaz Gulnur Muradoglu

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 7040 0124 (Phone)
+44 20 7040 8853 (Fax)

Queen Mary University of London ( email )

Francis Bancroft Building
Mile End Road
London, E1 4NS
United Kingdom

Ni Peng

School of Business and Management, Queen Mary University of London ( email )

Mile End Road
London, London E1 4NS
United Kingdom

Huai Qin

Queen Mary University of London ( email )

Mile End Road
London, E1 4NS
United Kingdom

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