A Re‐Examination of the Market Reaction to Failed Mergers

WALLACE N. DAVIDSON, DIPA DUTIA, Tsz Wan Cheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

21 Citations (Scopus)

Abstract

This study examines the revaluation of shares surrounding the cancellation of mergers over the years 1976–1985. The results are first categorized according to the party cancelling the merger and then by subsequent merger activity. The results are as expected: target firms that become involved in merger activity, subsequent to the cancellation, experience positive cumulative prediction errors (CPEs). Targets that do not become involved in subsequent merger activity have CPEs that return to pre‐merger announcement levels. These results do not vary when bidders or targets cancel the merger. 1989 The American Finance Association
Original languageEnglish
Pages (from-to)1077-1083
Number of pages7
JournalThe Journal of Finance
Volume44
Issue number4
DOIs
Publication statusPublished - 1 Jan 1989

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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