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Target Abnormal Returns Associated with Acquisition Announcements:Payment, Acquisition Form, and Managerial Resistance
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This article found that the difference in abnormal returns between the two types of offers is insignificant, while the difference between the abnormal returns associated with both types of offer types is significant when controlling for payment method and degree of resistance.Abstract:
Abnormal returns earned by target firms at the time of initial acquisition announcements are related to form of payment, degree of resistance, and type of offer. Results indicate that interdependence among these characteristics is important. Previous research suggests that tender offer targets earn higher abnormal returns than merger targets. After controlling for payment method and degree of resistance, however, the difference in abnormal returns between tender offers and mergers is insignificant. Resisted offers are associated with insignificantly higher returns than unresisted offers. Abnormal returns associated with cash offers are significantly higher than those associated with stock offers.read more
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