Reference prices and withdrawn acquisitions

Document Type

Article

Publication Date

10-1-2023

Abstract

Using a sample of 1525 withdrawn deals from 1981 to 2015 in the United States, we find that target firms close to their 52-week high prices after merger announcements have lower withdrawal probabilities. The effect is different across merger waves. The out-wave deals are sensitive to the target reference prices while in-wave deals are not. Moreover, targets with post-announcement prices close to 52-week high tend to have higher withdrawn returns and receive higher adjustments of offering prices in renegotiation. Overall, our results suggest that target post-announcement stock prices significantly affect deal outcomes.

Publication Title

International Journal of Finance and Economics

First Page Number

4365

Last Page Number

4384

DOI

10.1002/ijfe.2655

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