Takeovers and Divergence of Investor Opinion
Review of Financial Studies
2012
We test several hypotheses on how takeover premium is related to investors' divergence of opinion on a target's equity value. We show that the total takeover premium, the pre-announcement target stock price run-up, and the post-announcement stock price markup are all higher when investors have higher divergence of opinion. We obtain identical results with higher market-level investor sentiment. When divergence of opinion is higher, a firm is less likely to be a takeover target, although takeover synergy in successful takeovers is higher. Our results suggest that takeovers may play a role in explaining high contemporaneous stock prices in the presence of high divergence of investor opinion.
- DOI
- 10.1093/rfs/hhr109
- Volume
- 25 (1)
- Pages
- 227-277
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref