The acquirer’s reputation and the reaction of financial markets to the announcement of cross-border mergers and acquisitions

La reputación del adquirente y la reacción de los mercados financieros ante el anuncio de fusiones y adquisiciones internacionales

Ludivine Chalençon (), Ana Colovic, Olivier Lamotte and Ulrike Mayrhofer ()
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Ludivine Chalençon: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon
Ana Colovic: NEOMA - Neoma Business School
Ulrike Mayrhofer: GRM - Groupe de Recherche en Management - EA 4711 - UNS - Université Nice Sophia Antipolis (1965 - 2019) - UniCA - Université Côte d'Azur

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Abstract: We examine the influence of the acquirer's reputation on investors' reaction following the announcement of cross-border mergers and acquisitions. Drawing on signaling theory, we argue that the reputation sends a positive signal to investors when such deals are announced. Our empirical study is based on 134 cross-border M&As conducted by French multinationals. Our results confirm that reputation is positively related to M&A short-term value creation. However, the positive reaction of investors to the announcement of mergers and acquisitions is weaker for the most reputable companies. In addition, we show that the relationship between reputation and value creation is negatively moderated by the acquirer's diversification strategy.

Keywords: Reputation; Mergers-acquisitions; Value creation; Multinational companies; Signaling theory; Reputación; Fusiones y adquisiciones; Creación de valor; Empresas multinacionales; Teoría de la señal; Réputation; Fusions-acquisitions; Création de valeur; Entreprises multinationales; Théorie du signal (search for similar items in EconPapers)
Date: 2021
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Published in Management international = International management = Gestión internacional, 2021, 25 (1), pp.131-151. ⟨10.7202/1076021ar⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03083510

DOI: 10.7202/1076021ar

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