Prospect theory in M&A: Do historical purchase prices affect merger offer premiums and announcement returns?

IF 4.3 2区经济学 Q1 BUSINESS, FINANCE

Journal of Behavioral and Experimental Finance Pub Date : 2024-04-04 DOI:10.1016/j.jbef.2024.100931

Beni Lauterbach , Yevgeny Mugerman , Joshua Shemesh

引用次数: 0

Abstract

Prospect Theory suggests that when the pre-offer market price is below the historical purchase price, target shareholders may be reluctant to accept a merger offer, because it requires realizing nominal losses. In a sample of all U.S. public firm merger offers in 1990–2019, we find that the acquirer partially compensates target shareholders, including retail investors, for their losses via a higher offer premium. Consistent with Prospect Theory, the marginal compensation decreases with loss size and is higher in cash-only deals. We also show that the extra premium paid hurts (boosts) acquirer (target) shareholders' wealth.

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并购中的前景理论：历史收购价格会影响并购报价溢价和公告回报吗？

前景理论认为，当收购前的市场价格低于历史收购价格时，目标股东可能不愿意接受并购要约，因为这需要实现名义上的损失。在 1990-2019 年所有美国上市公司并购要约的样本中，我们发现收购方会通过提高要约溢价来部分补偿目标股东（包括散户投资者）的损失。与前景理论一致的是，边际补偿随着损失规模的扩大而递减，并且在纯现金交易中更高。我们还表明，额外支付的溢价会损害（提升）收购方（目标）股东的财富。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Behavioral and Experimental Finance BUSINESS, FINANCE-

CiteScore

13.20

自引率

6.10%

发文量

审稿时长

69 days

期刊介绍： Behavioral and Experimental Finance represent lenses and approaches through which we can view financial decision-making. The aim of the journal is to publish high quality research in all fields of finance, where such research is carried out with a behavioral perspective and / or is carried out via experimental methods. It is open to but not limited to papers which cover investigations of biases, the role of various neurological markers in financial decision making, national and organizational culture as it impacts financial decision making, sentiment and asset pricing, the design and implementation of experiments to investigate financial decision making and trading, methodological experiments, and natural experiments. Journal of Behavioral and Experimental Finance welcomes full-length and short letter papers in the area of behavioral finance and experimental finance. The focus is on rapid dissemination of high-impact research in these areas.