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The market valuation of M&A announcements in the United Kingdom

Dimitris Andriosopoulos (), Shuai Yang and Wei-an Li

International Review of Financial Analysis, 2016, vol. 48, issue C, 350-366

Abstract: This paper investigates the short-term market reaction to UK acquirers announcing domestic and foreign mergers and acquisitions (M&As) from 2000 to 2010. We define acquirers as value, moderate and glamour acquirers based on equally weighted market-to-book terciles. We find that value acquirers outperform glamour acquirers during and after the M&A announcement. We also focus on the impact of institutional ownership and find that higher domestic, foreign and total institutional ownership leads to lower market reaction to M&A announcements. We also find that long-term institutional investors lead to a higher post-announcement market performance. Finally, we find that greater domestic institutional ownership mitigates the typical poor short-term performance following M&A announcements of glamour acquirers.

Keywords: Institutional ownership; Domestic institutional ownership; Institutional ownership turnover; Mergers and acquisitions; Glamour acquirers; Value acquirers; Announcement returns (search for similar items in EconPapers)
JEL-codes: G14 G30 G32 G34 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.irfa.2015.05.022

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