How Much Is Too Much: Are Merger Premiums Too High?
"Is it too much to pay target firm shareholders a 50% premium on top of market price? Or is it too much to pay a 100% premium when pursuing mergers and acquisitions? How much is too much? In this paper, we examine how the extent of merger premiums paid impacts both the long-run and announcement period stock returns of acquiring firms. We find no evidence that acquirers paying high premiums underperform those paying relatively low premiums in three years following mergers, and the result is robust after controlling for a variety of firm and deal characteristics. Short term cumulative abnormal returns are moreover positively correlated to the level of the premium paid by acquirers. Our evidence therefore suggests that high merger premiums paid are unlikely to be responsible for acquirers' long-run post merger underperformance." Copyright 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.
Year of publication: |
2008
|
---|---|
Authors: | Antoniou, Antonios ; Arbour, Philippe ; Zhao, Huainan |
Published in: |
European Financial Management. - European Financial Management Association - EFMA. - Vol. 14.2008, 2, p. 268-287
|
Publisher: |
European Financial Management Association - EFMA |
Saved in:
freely available
Saved in favorites
Similar items by person
-
How much is too much: are merger premiums too high?
Antoniou, Antonios, (2008)
-
Measuring the economic gains of mergers and acquisitions : is it time for a change?
Antoniou, Antonios, (2011)
-
How Much is Too Much : Are Merger Premiums Too High?
Antoniou, Antonios, (2007)
- More ...