2 edition of Acquisition announcement and stock price behaviour found in the catalog.
|Statement||University College Dublin|
|Publishers||University College Dublin|
|The Physical Object|
|Pagination||xvi, 50 p. :|
|Number of Pages||64|
|2||Working papers series -- no. 15|
nodata File Size: 7MB.
37 — a full point below the merger value. These studies show that the stock of the acquiring company usually goes down immediately following an acquisition announcement, while the stock of the target company, or company being acquired, tends to go up. The methodology is well established in finance studies, but has not been applied to the shipping industry. The author has explained the issue in a lucid manner for the benefits of common investors.
3998 per share in value for their stock at closing. This potential for negative outcomes is known as. The higher the premium, the more the acquiring company expects to benefit from the deal. But, the case of merger happens between two firms of almost equal size. If you decide to test a strategy like this it would be a good idea to start with paper trading.
The other reason for coming together of different companies is to create a combined entity that will be bigger than the sum total of both the entities. Therefore, this finding is inconsistent with the efficient market hypothesis in its Weak form. For a taste of just how volatile a reaction the markets can have to unexpected commentary, take a look at the graphic below.
Government-issued announcements, economic data releases, or guidance from the Fed can also move broader markets and investor sentiment.
If the management team struggles or has difficulty with the transition and integration, the deal could push the acquiring company's shares down even further over the long term.
Additional debt or unforeseen expenses are incurred as a result of the purchase.