Target Abnormal Returns Associated with Acquisition Announcements: Payment, Acquisition Form, and Managerial Resistance

22 Pages Posted: 23 Sep 2008 Last revised: 29 Jul 2011

See all articles by Yen-Sheng Huang

Yen-Sheng Huang

National Taiwan University of Science and Technology

Ralph A. Walkling

Drexel University - Lebow College of Business

Date Written: 1987

Abstract

Abnormal returns earned by target firms at the time of initial acquisition announcements are related to form of payment, degree of resistance, and type of offer. Results indicate that interdependence among these characteristics is important. Previous research suggests that tender offer targets earn higher abnormal returns than merger targets. After controlling for payment method and degree of resistance, however, the difference in abnormal returns between tender offers and mergers is insignificant. Resisted offers are associated with insignificantly higher returns than unresisted offers. Abnormal returns associated with cash offers are significantly higher than those associated with stock offers.

Suggested Citation

Huang, Yen-Sheng and Walkling, Ralph August, Target Abnormal Returns Associated with Acquisition Announcements: Payment, Acquisition Form, and Managerial Resistance (1987). Journal of Financial Economics, Vol. 19, pp. 329-349, 1987. Available at SSRN: https://ssrn.com/abstract=918056

Yen-Sheng Huang

National Taiwan University of Science and Technology ( email )

Keelung Road
Sec 43
Taipei
Taiwan

Ralph August Walkling (Contact Author)

Drexel University - Lebow College of Business ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
(215) 895-4920 (Phone)
(215) 895-6119 (Fax)

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