The source of gains to targets and their industry rivals: Evidence based on terminated merger proposals

    Authors

    A. Akhigbe; S. F. Borde;A. M. Whyte

    Comments

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    Abbreviated Journal Title

    Financ. Manage.

    Keywords

    EMPIRICAL-ANALYSIS; ACQUIRING FIRMS; IMPACT; ANNOUNCEMENTS; TAKEOVER; RETURNS; WEALTH; OFFERS; Business, Finance

    Abstract

    We examine merger gains to targets and their industry rivals and find evidence consistent with the signaling hypothesis. We find that targets and rivals benefit from the merger announcement, but termination results in significant negative returns for targets and significant positive returns for rivals. Termination gains to rivals support the hypothesis that rival firms could become acquisition targets. The gains are positively related to subsequent acquisition activity involving the target and the extent of merger activity in the industry, and are inversely related to the relative size of the target rivals, the presence of competing bidders, and the regulatory environment.

    Journal Title

    Financial Management

    Volume

    29

    Issue/Number

    4

    Publication Date

    1-1-2000

    Document Type

    Article

    Language

    English

    First Page

    101

    Last Page

    118

    WOS Identifier

    WOS:000170189400004

    ISSN

    0046-3892

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