Network centrality and mergers

Mufaddal Baxamusa (), Saima Javaid () and Khadija Harery ()

Review of Quantitative Finance and Accounting, 2015, vol. 44, issue 3, 393-423

Abstract: We hypothesize that the more central a firm in the customer–supplier network the lower is its returns from an acquisition. We find that the acquirers’ announcement day abnormal returns decline if the acquirer is more central in the network. Additionally, the target’s premiums decline if the target is more central in the network. Lastly, we also find that conditioned on the acquirer’s centrality, the acquirer’s announcement day abnormal returns increase if more information is available about the target. The centrality of the firm represents information availability of the firm. Thus, information availability may lead to a decline in acquisition returns. Copyright Springer Science+Business Media New York 2015

Keywords: Mergers; Acquisitions; Network; Centrality; Returns; G34; G30 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11156-013-0411-7

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