Smart investments by smart money: Evidence from acquirers' projected synergies

Ahmad Ismail (), Samer Khalil, Assem Safieddine and Sheridan Titman

Journal of Corporate Finance, 2019, vol. 56, issue C, 343-363

Abstract: Institutional investors tend to accumulate the shares of firms that announce acquisitions. The tendency to accumulate shares is stronger when the acquirer discloses synergy forecasts, and it is especially strong when the disclosed synergies are higher. This evidence is consistent with the idea that institutional investors are attracted to situations where their superior access to management and analysts provides an information advantage. Indeed, this tendency to accumulate information sensitive shares is especially strong for hedge funds, which tend to have the greatest information advantage. Moreover, stock prices respond favorably in the quarter following the acquisition announcement when higher institutional holdings are revealed.

Keywords: Stock picking; Mergers; Acquisitions; Institutional investors (search for similar items in EconPapers)
JEL-codes: G14 G23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:56:y:2019:i:c:p:343-363

DOI: 10.1016/j.jcorpfin.2019.03.003

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