Cross-ownership, returns, and voting in mergers

Gregor Matvos and Michael Ostrovsky

Journal of Financial Economics, 2008, vol. 89, issue 3, 391-403

Abstract: We show that institutional shareholders of acquiring companies on average do not lose money around public merger announcements, because they hold substantial stakes in the targets and make up for the losses from the acquirers with the gains from the targets. Depending on their holdings in the target, acquirer shareholders generally realize different returns from the same merger, some losing money and others gaining. This conflict of interest is reflected in the mutual fund voting behavior: In mergers with negative acquirer announcement returns, cross-owners are significantly more likely to vote for the merger.

Keywords: Mergers; and; acquisitions; Bidder; returns; Proxy; voting (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (73)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:89:y:2008:i:3:p:391-403

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