Department/School
Finance
Date of this version
4-2015
Document Type
Article
Keywords
Mergers; acquisitions; network; centrality; returns
Abstract
We hypothesize that the more central a firm in the customer-supplier network the lower is its returns from an acquisition. We find that the acquirers’ announcement day abnormal returns decline if the acquirer is more central in the network. Additionally, the target’s premiums decline if the target is more central in the network. Lastly, we also find that conditioned on the acquirer’s centrality, the acquirer’s announcement day abnormal returns increase if more information is available about the target. The centrality of the firm represents information availability of the firm. Thus, information availability may lead to a decline in acquisition returns.
Volume
44
Issue
3
Published in
Review of Quantitative Finance and Accounting
Citation/Other Information
44 (3) 393-423