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Are Acquirer Shareholders Happier when Their Industries Are Unhappy?

Jana P. Fidrmuc and Tereza Tykvova
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Jana P. Fidrmuc: University of Warwick

No 23-52, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Many mergers destroy shareholder value because managers intentionally waste corporate resources to pursue private benefits. Using textual analysis, we link industry conditions as reflected in acquirer peers' 10-K statements to acquirer announcement abnormal returns. We find that more negative industry conditions are associated with higher acquirer abnormal returns. Our results suggest that difficult times impose discipline on managers who then tend to focus on deals that create value for acquirer shareholders.

Keywords: mergers and acquisitions; corporate investment decisions; industry situation; acquirer abnormal returns (search for similar items in EconPapers)
JEL-codes: G34 G41 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2023-06
New Economics Papers: this item is included in nep-cfn, nep-com and nep-fmk
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