The Real Effects of Financial Markets: The Impact of Prices on Takeovers

@article{Edmans2012TheRE,
  title={The Real Effects of Financial Markets: The Impact of Prices on Takeovers},
  author={Alex Edmans and I. Goldstein and W. Jiang},
  journal={Journal of Finance},
  year={2012},
  volume={67},
  pages={933-971}
}
  • Alex Edmans, I. Goldstein, W. Jiang
  • Published 2012
  • Economics
  • Journal of Finance
  • Using mutual fund redemptions as an instrument for price changes, we identify a strong effect of market prices on takeover activity (the "trigger effect"). An inter-quartile decrease in valuation leads to a 7 percentage point increase in acquisition likelihood, relative to a 6% unconditional takeover probability. Instrumentation addresses the fact that prices are endogenous and increase in anticipation of a takeover (the "anticipation effect.") Our results overturn prior literature which found… CONTINUE READING
    442 Citations

    Figures and Tables from this paper

    The Real Impact of Passive Investing in Financial Markets
    • 1
    • Highly Influenced
    • PDF
    Real effects of stock underpricing HAU
    • PDF
    The Real Effects of Financial Markets
    • 341
    • PDF
    06 THE REAL IMPACT OF PASSIVE INVESTING IN
    • 1
    • PDF
    The Effects of the Aggregate Stock Market on Mergers and Acquisitions
    Investor Protection and the Value Impact of Stock Liquidity Abstract
    • 2015
    • PDF
    The Real Effects of Stock Prices: Learning, Disclosure and Corporate Social Responsibility
    • 2

    References

    SHOWING 1-10 OF 98 REFERENCES