The 52-Week High and M&A Deals: International Evidence

Abstract

Motivated by the seminal findings of Baker et al. (2012) and Ma et al. (2019), we examine the effects of stocks' 52-week highs on mergers and acquisitions in a global sample across 34 countries. First, we confirm that the targets' past stock price peaks serve as a reference point in merger negotiations, impacting both offer premia and the likelihood of deal acceptance. Second, we confirm that acquirers trading far below their 52-week high experience more positive market reactions. However, economic magnitude and statistical significance differ substantially across regions. In sum, the 52-week high plays a smaller role for M&A deals internationally compared to the United States.

Keywords: Mergers & Acquisitions, 52-Week High, Reference Point, Offer Price, Behavioral Corporate Finance, International Mergers

JEL Classification: G14, G34, G41