Firms covered by more analysts are more likely to become takeover targets and more likely to enter deals in which their acquirers initiate private merger negotiations. Moreover, when equity analysts' pre-acquisition price forecasts imply greater target undervaluation, target firms are more...

We examine completed M&A deals with large acquirer shareholder dollar wealth gains at announcement. We find that large-gain acquisitions are (i) typically “bolt-on” deals that are small relative to the acquirer's size; (ii) transaction-specific events (not firm- nor CEO-specific events);...

Acquirers do not benefit from hiring the CEOs of firms they buy, either in terms of merger announcement returns or long-run operating performance. This is especially true when the retained CEOs exhibit inferior quality (as proxied by target firm industrial efficiency or the target CEO's...

This paper develops a new approach to distinguishing clustering in analyst forecasts due to the causal influence of one analyst's forecast on another from clustering due to a common response to correlated information. We apply this approach by studying how analysts who currently provide...

This paper develops and applies a new approach to disentangling the influence of analysts on each other's earnings forecasts from the effects of correlated information shocks. We estimate that a new forecast by an analyst that is c cents above (below) another analyst's forecast causes the other...

This paper examines the mechanisms by which acquirer CEOs are incentivized and their impact on merger decisions. We argue that the pre-merger structure of CEO wealth impacts a CEO's risk tolerance and ultimately her willingness to undertake a merger as well as the framework of the deal. As the...

This paper investigates the effects of analyst recommendations issued after a merger announcement on deal completion. We find the probability of completion increases (decreases) with the favorability of acquirer (target) recommendations. Results from instrumental variables tests support...

We explore how analyst recommendation changes affect a security's trading volume at the market maker of the analyst's own firm. Using Nasdaq PostData, we find a dramatic increase in trading volume handled by the market maker of the analyst's firm relative to other market makers on recommendation...

This paper examines the debt underwriting relationship for banks. Publicly-traded investment and commercial banks (“banks”) are unique as they are the only firms capable of underwriting their own securities. In nearly 30% of their debt issuances, banks hire another underwriter and do so...

We rely on recently developed general equilibrium asset pricing models, from which we derive some predictions about how heterogeneity of beliefs affects return and volatility dynamics. The first contribution of our paper is the derivation of a simple decomposition of the conditional stock...