Adra, S. orcid.org/0000-0002-0187-2607 and Barbopoulos, L.G. (2020) Do corporations learn from mispricing? Evidence from takeovers and corporate performance. International Review of Financial Analysis, 68. 101128. ISSN 1057-5219
Abstract
In this article we form the simple prediction that mispricing encourages traders to collect costly information that guides managerial decisions at corporate level. Our findings support this prediction based on evidence derived from both the US market for corporate control and the overall variation in aggregate corporate profits. The trading activity in response to the temporary mispricing of the merging companies provides useful information that leads to the design of high-synergy deals. Such synergies are reflected in an increase in the announcement period acquirer abnormal returns and are not reversed in the long-run. At the market-wide level, our results suggest that the growth in the overall stock trading volume in response to market mispricing is associated with high future corporate profit growth. Overall, after controlling for several economic and financial conditions, the temporary mispricing in a developed and generally efficient stock market stimulates informative trading, ultimately leading to value- and performance-enhancing corporate decisions.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 Published by Elsevier Inc. This is an author produced version of a paper subsequently published in International Review of Financial Analysis. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Mispricing; Information; Acquisitions; Acquirer returns; Corporate profits |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 13 Sep 2021 10:33 |
Last Modified: | 13 Sep 2021 10:33 |
Status: | Published |
Publisher: | Elsevier BV |
Refereed: | Yes |
Identification Number: | 10.1016/j.irfa.2017.08.006 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:178114 |
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Filename: Adra and Barbopoulos, 2017. Do corporations learn from mispricing.pdf
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