Edited by Claire A. Hill and Steven Davidoff Solomon
Chapter 3: The market for corporate control: survey of the empirical evidence, estimation issues, and potential areas for future research
One of the more highly researched topics in the financial economics literature has been the analysis of the gains made by shareholders of companies that participate in a merger and acquisition transaction. This paper surveys the evidence for which acquirer characteristic or merger transaction type generates non-positive or positive abnormal returns for the acquirer’s shareholders. In doing so, I describe a comprehensive set of hypotheses that has been built on existing theory, which has been tested using proxies variables in a regression specification. The chapter then explains that a number of new hypotheses have yet to be examined. Finally, the paper describes outstanding empirical issues in much of the existing literature.
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