Investors' time preferences and takeover performance

Wolfgang Breuer, Bushra Ghufran and Astrid Juliane Salzmann

International Review of Financial Analysis, 2020, vol. 67, issue C

Abstract: We investigate investors' time preferences and takeover outcomes in a cross-disciplinary international study. We use a cultural measure on long-term orientation (LTO) to capture investors' time preferences. Additionally, we study how investor protection and the nature of the deal (cross-border vs domestic) in connection with investors' time preferences come into play in explaining long-term takeover performance. Evaluating data on 38,153 M&A deals from 54 countries, over the period from 2000 to 2015, we offer empirical evidence that investors' future orientation significantly improves post-M&A performance, while short-term oriented behavior deteriorates takeover performance. Our findings further suggest that the positive impact of investors' future orientation on takeover performance is more pronounced in countries with strong investor protection. Moreover, the impact of investors' time preferences is stronger for domestic deals where the confounding impact of cultural differences is almost non-existent.

Keywords: Future orientation; Investors' time preferences; Mergers and acquisitions; Takeover performance; Investor protection (search for similar items in EconPapers)
JEL-codes: D22 G34 G38 K10 Z10 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:67:y:2020:i:c:s105752191930540x

DOI: 10.1016/j.irfa.2019.101435

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