Acquisitions and the Information Environment of Firms |
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Authors: | Ravi Bhushan Jang Y Cho |
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Institution: | Southern Methodist University, Dallas, TX 75275, deceased;University of Nebraska, Lincoln, NE 68588–0488 |
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Abstract: | This paper investigates how acquisitions affect analyst following of firms. Analyst following increases as a result of a merger. However, all of that increase can be attributed to the changes in firm-specific characteristics resulting from the merger. Changes in analyst following around mergers are positively related to changes in firm size, expenditures on R&D, and the ratio of book to the market value of equity. Finally, the relatedness of merger appears to be an important determinant of analyst following of firms engaged in acquisitions. |
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