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Serial acquirers and stock price crash risk: International evidence

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  • Xu, Weidong
  • Gao, Xin
  • Li, Donghui
  • Zhuang, Mingming
  • Yang, Shijie

Abstract

This study investigates the relationship between serial M&A and stock price crash risk. Employing an international sample of 22,140 unique firms from 42 economies between 1989 and 2017, we show that serial acquirers experience higher subsequent crash risk after they initiate serial M&A. Consistent with the bad news hoarding channel, we find that serial M&A are associated with worse subsequent firm-level accounting information environment and poorer operating performance. Moreover, the observed heightened crash risk is more pronounced in countries with opaque information environments or weaker shareholder protection. Our results remain unchanged in several robustness checks addressing endogeneity issues.

Suggested Citation

  • Xu, Weidong & Gao, Xin & Li, Donghui & Zhuang, Mingming & Yang, Shijie, 2022. "Serial acquirers and stock price crash risk: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:intfin:v:78:y:2022:i:c:s1042443122000294
    DOI: 10.1016/j.intfin.2022.101538
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    More about this item

    Keywords

    Serial Mergers and Acquisitions; Stock Price Crash Risk; Corporate Governance; Bad News Hoarding;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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