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The acquirer’s reputation and the reaction of financial markets to the announcement of cross-border mergers and acquisitions
[La reputación del adquirente y la reacción de los mercados financieros ante el anuncio de fusiones y adquisiciones internacionales]

Author

Listed:
  • Ludivine Chalençon

    (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Ana Colovic

    (NEOMA - Neoma Business School)

  • Olivier Lamotte

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Ulrike Mayrhofer

    (GRM - Groupe de Recherche en Management - EA 4711 - UNS - Université Nice Sophia Antipolis (1965 - 2019) - UniCA - Université Côte d'Azur)

Abstract

We examine the influence of the acquirer's reputation on investors' reaction following the announcement of cross-border mergers and acquisitions. Drawing on signaling theory, we argue that the reputation sends a positive signal to investors when such deals are announced. Our empirical study is based on 134 cross-border M&As conducted by French multinationals. Our results confirm that reputation is positively related to M&A short-term value creation. However, the positive reaction of investors to the announcement of mergers and acquisitions is weaker for the most reputable companies. In addition, we show that the relationship between reputation and value creation is negatively moderated by the acquirer's diversification strategy.

Suggested Citation

  • Ludivine Chalençon & Ana Colovic & Olivier Lamotte & Ulrike Mayrhofer, 2021. "The acquirer’s reputation and the reaction of financial markets to the announcement of cross-border mergers and acquisitions [La reputación del adquirente y la reacción de los mercados financieros ," Post-Print halshs-03083510, HAL.
    • Handle: RePEc:hal:journl:halshs-03083510
    DOI: 10.7202/1076021ar
    as

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