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Are Acquirer Shareholders Happier when Their Industries Are Unhappy?

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  • Jana P. Fidrmuc

    (University of Warwick)

  • Tereza Tykvova

    (University of St. Gallen; Swiss Finance Institute)

Abstract

Many mergers destroy shareholder value because managers intentionally waste corporate resources to pursue private benefits. Using textual analysis, we link industry conditions as reflected in acquirer peers' 10-K statements to acquirer announcement abnormal returns. We find that more negative industry conditions are associated with higher acquirer abnormal returns. Our results suggest that difficult times impose discipline on managers who then tend to focus on deals that create value for acquirer shareholders.

Suggested Citation

  • Jana P. Fidrmuc & Tereza Tykvova, 2023. "Are Acquirer Shareholders Happier when Their Industries Are Unhappy?," Swiss Finance Institute Research Paper Series 23-52, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2352
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    More about this item

    Keywords

    mergers and acquisitions; corporate investment decisions; industry situation; acquirer abnormal returns;
    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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