 The Causality between Analysts’ Recommendations and Corporate M&AsChing-Chih Wu and Tung-Hsiao Yang Journal of Applied Finance & Banking, 2024, vol. 14, issue 3, 2 Abstract: This study examines the role of analysts' recommendations in mergers and acquisitions (M&As), focusing on their impact on payment methods and acquirers' long-term performance. The findings reveal that acquirers with strong buy or buy recommendations are more likely to use 100% stock payment, consistent with the overvaluation hypothesis. Conversely, those with strong sell or sell recommendations tend to prefer cash payment. Notably, acquirers with higher recommendation scores exhibit better long-term market performance. This finding suggests that analysts' recommendations before M&A announcements do not fully incorporate the deal's potential impact on long-term value creation. Moreover, acquirers with buy recommendations experience significantly lower long-term returns, highlighting the disconnect between analysts' recommendations and long-term performance. These findings contribute to understanding the information content and limitations of analysts' recommendations in the M&A context.  JEL classification numbers: G34, G24, G14. Keywords: Mergers and acquisitions; Analysts' recommendations; Payment methods; Information quality; Overvaluation hypothesis. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spt:apfiba:v:14:y:2024:i:3:f:14_3_2 Access Statistics for this article More articles in Journal of Applied Finance & Banking from SCIENPRESS Ltd |
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