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Returns to Acquirers of Listed and Unlisted Targets

Published online by Cambridge University Press:  06 April 2009

Mara Faccio
Affiliation:
mara.faccio@owen.vanderbilt.edu, Owen Graduate School of Management, Vanderbilt University, Nashville, TN 37240
John J. McConnell
Affiliation:
mcconnell@mgmt.purdue.edu, Krannert School of Management, Purdue University, West Lafayette, IN 47907
David Stolin
Affiliation:
d.stolin@esc-toulouse.fr, Toulouse Business School, 20 bd Lascrosses, BP 7010, Toulouse, Cedex 7, 31068, France.

Abstract

We examine announcement period abnormal returns to acquirers of listed and unlisted targets in 17 Western European countries over the interval 1996–2001. Acquirers of listed targets earn an insignificant average abnormal return of –0.38%, while acquirers of unlisted targets earn a significant average abnormal return of 1.48%. This listing effect in acquirers' returns persists through time and across countries and remains after controlling for the method of payment for the target, the acquirer's size and Tobin's Q, pre-announcement leakage of information about the transaction, whether the acquisition created a blockholder in the acquirer's ownership structure, whether the acquisition was a cross-border deal, and other variables. The fundamental factors that give rise to this listing effect, which has also been documented in U.S. acquisitions, remain elusive.

Type
Research Article
Copyright
Copyright © School of Business Administration, University of Washington 2006

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