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Investor attention and market reactions to early announcements in mergers and acquisitions

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  • Muradoglu, Gulnur
  • Peng, Ni
  • Qin, Huai
  • Xia, Chunling

Abstract

We focus on the market reaction to early announcements in mergers and acquisitions and find that acquiring firms attract substantial investor attention with their early announcements. The positive relationship between early announcements and takeover 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.

Suggested Citation

  • Muradoglu, Gulnur & Peng, Ni & Qin, Huai & Xia, Chunling, 2024. "Investor attention and market reactions to early announcements in mergers and acquisitions," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005094
    DOI: 10.1016/j.irfa.2023.102993
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    2. Han, Huanfa & Liu, Cuiping & Li, Jing, 2024. "Managerial overconfidence and stock price crash risk," Finance Research Letters, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Mergers; Acquisitions; Investor attention; Early announcement;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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