Based on prospect theory, we posit that security analysts' target prices function as a reference point for takeover bids and affect deal completion. Using a sample of US takeovers from 1999 to 2014, we find a negative relation between target prices for a takeover target and the chances for...

This paper studies the first day return of 227 carve-outs during 1996-2013. I find that the first day return of newly issued subsidiary stocks is explained by the reporting distortions in the pre IPO period, conditioned on whether the executives and directors of the subsidiary received stock...

Most existing studies conclude that the accuracy of analysts' target prices is questionable. In forecasting target prices, analysts estimate a future stock price under the constraint of a time frame of usually 12 months. We exclude this source of uncertainty by focusing on valuations in takeover...

If a bidder launches a takeover offer for a listed company being part of a stock market index, then index funds and exchange traded funds (ETF) as shareholders of this company cannot easily tender their shares without losing track of the index. This paper analyzes the impact of index fund and...

We propose an “M&A activity” hypothesis as a partial explanation for IPO underpricing. When going public during active corporate control markets, managers may take actions intended to safeguard their control. In support of this conjecture, we find that pre-IPO M&A activity directly explains...

This study analyzed activism that leads to a merger or acquisition (M&A) of a firm to see its benefits for the shareholders at the target firm as well as its acquirer. It used over thirty years of data to understand the impact of the activists’ demands of strategic significance for the firms....

When an event is anticipated, the firm's stock return around the announcement of the event may have an inconsistent sign: a positive sign around negative news, or vice versa. We attempt to quantify the frequency of this problem, first with a brief mathematical model and simulation, then with...

We examine whether financing commitments from a target firm's financial advisor, in the form of stapled financing, provide certification of target value. Using a dataset of leveraged buyouts spanning 2002-2011, and addressing endogeneity issues, we find that stapled financing has significantly...

We provide new insights into the determinants of acquirer announcement returns with a unique sample of targets that are acquired within three years of their IPOs. Existing studies of acquisitions of private and established public targets find positive relations between acquirer announcement...