Institutional investment in IPOs and post-IPO M&A activity

Christopher W. Anderson and Jian Huang

Journal of Empirical Finance, 2017, vol. 41, issue C, 1-18

Abstract: Secondary market stock returns of newly public firms with high levels of institutional investment exceed returns of firms with low institutional investment (Field and Lowry, 2009). We find that a material portion of this performance differential is attributable to institutional investment in firms that participate in mergers and acquisitions after their initial public offerings (IPOs). Specifically, institutions not only tend to avoid underperforming firms, on average, but also invest heavily in IPO firms that subsequently become M&A participants, especially well-performing bidders and targets. Superior returns among firms with high institutional ownership suggests the ability of institutional investors to identify and actively monitor newly public M&A participants.

Keywords: Initial public offering (IPO); Institutional investors; Mergers and acquisitions (M&A) (search for similar items in EconPapers)
JEL-codes: G20 G32 G34 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927539816301475
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:41:y:2017:i:c:p:1-18

DOI: 10.1016/j.jempfin.2016.12.003

Access Statistics for this article

Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

More articles in Journal of Empirical Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().