Merger momentum and investor sentiment: the stock market reaction to merger announcements

Richard Rosen

No WP-04-07, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper examines the effects of mergers on bidding firms? stock prices. We find evidence of merger momentum: bidder stock prices are more likely to increase when a merger is announced if recent mergers by other firms have been received well (a ?hot? merger market) or if the overall stock market is doing better. However, there is long run reversal. Long-run bidder stock returns are lower for mergers announced when the either merger or stock markets were hot at the time of the merger than for those announced at other times.

Keywords: Consolidation and merger of corporations; Stock market; Prices (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-com and nep-fin
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Merger Momentum and Investor Sentiment: The Stock Market Reaction to Merger Announcements (2006)
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