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Does the Valuation of the Target’’s Market Matter? Evidence from Cross Border Acquisitions by U.S. Firms

Jeffrey M.Coy
사람과세계경영학회 (People&Global Business Association)|2012.06|Global Business and Finance Review|제17권 제1호|pp. 38-55

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참고문헌

키워드

ValuationCross-border transactionTarget’s marketCross-border acquisitions

초록

Most cross-border transactions by U.S. firms occur when the target’’s market is in a period of high valuation. In this study, I show that timing of cross-border acquisitions by U.S. firms can have a positive impact on announcement returns and on two-year buy-and-hold returns if the acquisition occurs during a period of low market valuation in the target’’s country. During such periods, abnormal announcement returns and the two-year buy-and-hold abnormal returns are significantly higher than when the acquisition is made during periods of high target market valuation. The implication is that if a short difference in acquisition timing——a month or less—— can have a significant impact on the value of the firm, then timing should always be given serious consideration.

Abstract

Most cross-border transactions by U.S. firms occur when the target’’s market is in a period of high valuation. In this study, I show that timing of cross-border acquisitions by U.S. firms can have a positive impact on announcement returns and on two-year buy-and-hold returns if the acquisition occurs during a period of low market valuation in the target’’s country. During such periods, abnormal announcement returns and the two-year buy-and-hold abnormal returns are significantly higher than when the acquisition is made during periods of high target market valuation. The implication is that if a short difference in acquisition timing——a month or less—— can have a significant impact on the value of the firm, then timing should always be given serious consideration.

참고문헌 (41)

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관련 논문AI추천

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