The market valuation of M&A announcements in the United Kingdom |
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| Affiliation: | 1. Department of Accounting and Finance, University of Strathclyde, 100 Cathedral Street, Glasgow G4 0LN, United Kingdom;2. China Academy of Corporate Governance, Business School, Nankai University, Tianjin, China;3. Tianjin University of Finance and Economics, Tianjin, China; China Academy of Corporate Governance, Business School, Nankai University, Tianjin, China;1. National Institute of Science and Technology Policy, Japan;2. Graduate School of Economics, The University of Nottingham, United Kingdom;3. Preparatory Office for the Faculty of International Social Studies, Gakushuin University, Japan;4. Tokyo Kyodo Accounting Office, Japan;5. Faculty of Political Science and Economics, Waseda University, Japan;1. Nova School of Business and Economics, Campus de Campolide, 1099-085 Lisboa, Portugal;2. FGV/EESP (Sao Paulo School of Economics), 474 Itapeva street – Bela Vista, 01332 – 000 Sao Paulo, Brazil;3. FECAP, 532 Liberdade Avenue, 01502-001, Sao Paulo, Brazil;1. Olayan School of Business, American University of Beirut, Lebanon;2. Surrey Business School, University of Surrey, GU2 7XH, UK |
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| Abstract: | This paper investigates the short-term market reaction to UK acquirers announcing domestic and foreign mergers and acquisitions (M&As) from 2000 to 2010. We define acquirers as value, moderate and glamour acquirers based on equally weighted market-to-book terciles. We find that value acquirers outperform glamour acquirers during and after the M&A announcement. We also focus on the impact of institutional ownership and find that higher domestic, foreign and total institutional ownership leads to lower market reaction to M&A announcements. We also find that long-term institutional investors lead to a higher post-announcement market performance. Finally, we find that greater domestic institutional ownership mitigates the typical poor short-term performance following M&A announcements of glamour acquirers. |
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