Macroeconomic news and acquirer returns in M&As: The impact of investor alertness

Leonidas G. Barbopoulos, Samer Adra and Anthony Saunders

Journal of Corporate Finance, 2020, vol. 64, issue C

Abstract: We investigate the extent to which the scheduled release of macroeconomic indicators affects the acquirer's value in Mergers and Acquisitions (M&As). We find that M&As announced on days of the release of key macroeconomic indicators (i.e. indicator days) realize higher announcement period risk-adjusted returns compared to counterparts announced on non-indicator days. The positive wealth effect is due to the higher market attention on indicator days, which is particularly relevant for smaller M&As that are not usually exposed to significant investor scrutiny. The results hold after addressing self-selection bias concerns. We also find that firms announcing M&As on indicator days are more likely to “listen” to the market's feedback.

Keywords: Macroeconomic indicators; Investor attention; Mergers and acquisitions (M&As); Small deals; Risk-adjusted returns; Buy-and-hold abnormal returns (search for similar items in EconPapers)
JEL-codes: G12 G13 G14 G34 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:64:y:2020:i:c:s0929119920300274

DOI: 10.1016/j.jcorpfin.2020.101583

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