Determinants and implications of arbitrage holdings in acquisitions

We find evidence of passive and active roles for arbitrageurs in the acquisition process. Using a simultaneous-equation framework to recognize endogeneity, we analyze 608 acquisition bids over the 1992–1999 period. Our results indicate that the change in arbitrage holdings is greater in successful o...

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Bibliographic Details
Published inJournal of financial economics Vol. 77; no. 3; pp. 605 - 648
Main Authors Hsieh, Jim, Walkling, Ralph A.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.09.2005
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Financial Economics
Subjects
Acquisitions
Acquisitions & mergers
Arbitrage
Business studies
Capital returns
Economic concentration
Empirical research
Financial economics
Financial management
Market for corporate control
Mergers
Ownership and control
Studies
Take-overs
U.S.A
G34
Mergers
G14
Arbitrage
Market for corporate control
D82
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Summary:We find evidence of passive and active roles for arbitrageurs in the acquisition process. Using a simultaneous-equation framework to recognize endogeneity, we analyze 608 acquisition bids over the 1992–1999 period. Our results indicate that the change in arbitrage holdings is greater in successful offers. However, changes in arbitrage holdings are also related to the probability of success, bid premia, and arbitrage returns. In addition, the change in arbitrage holdings is positively associated with both revision returns and the occurrence of subsequent bids. Overall, we find that merger arbitrageurs play an important role in the market for corporate control.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-405X
1879-2774
DOI:10.1016/j.jfineco.2004.08.003