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Manager sentiment, deal characteristics, and takeover performance

Author

Listed:
  • An, Suwei
  • Liu, Yi
  • Tan, Xiaofen
  • Wu, Kai

Abstract

Various studies analyze the driving forces behind takeover activities, including investor sentiment, liquidity, and fundamental shocks. In this study, we examine how manager sentiment influences takeover characteristics and long-term performance using textual analysis of data in 10-K and 10-Q filings. Our findings identify that manager sentiment has strong positive predictive power for takeover activities, and high (positive) manager sentiment decreases the long-term performance of takeover deals. Moreover, we show that high-sentiment managers tend to undertake large deals, decrease all-stock transactions, acquire hard-to-value targets, and provide high target valuations, suggesting over-investment for underperforming high-sentiment deals.

Suggested Citation

  • An, Suwei & Liu, Yi & Tan, Xiaofen & Wu, Kai, 2024. "Manager sentiment, deal characteristics, and takeover performance," The British Accounting Review, Elsevier, vol. 56(6).
    • Handle: RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924001136
    DOI: 10.1016/j.bar.2024.101374
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    More about this item

    Keywords

    Manager sentiment; Deal characteristic; Takeover performance; Textual analysis;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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