IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v64y2024i4p4393-4427.html
   My bibliography  Save this article

New blockholder and investor limited attention: Evidence from private acquisitions

Author

Listed:
  • Mehmet E. Akbulut
  • Emily Jian Huang
  • Qingzhong Ma
  • Athena Wei Zhang

Abstract

In acquisitions of private firms, new blockholders (NewBs) are expected to form when substantial stocks are paid. Investors react strongly to a NewB signal, given the perceived monitoring and certification benefits. However, they largely ignore value‐relevant but less salient signals, such as the true quality of the acquisition. Investors' limited attention allows financially weak firms to adopt the NewB strategy and take speculative deals. Our results support this inattention hypothesis: NewB acquirers are financially weaker and earn higher announcement‐period returns, but lower long‐run returns; moreover, acquirers' financial weakness negatively predicts long‐run performance.

Suggested Citation

  • Mehmet E. Akbulut & Emily Jian Huang & Qingzhong Ma & Athena Wei Zhang, 2024. "New blockholder and investor limited attention: Evidence from private acquisitions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 4393-4427, December.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:4:p:4393-4427
    DOI: 10.1111/acfi.13310
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.13310
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.13310?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:64:y:2024:i:4:p:4393-4427. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.