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|Title: ||Takeovers and Divergence of Investor Opinion|
|Authors: ||John, Kose|
|Issue Date: ||13-Sep-2011|
|Series/Report no.: ||FIN-11-006|
|Abstract: ||We test several hypotheses on how takeover premium is related to
investors’ divergence of opinion on the target’s equity
value. We show that the total takeover premium, the pre-announcement
target stock price runup and the post-announcement stock price markup
are all higher when investors have higher divergence of opinion.
Identical results obtain with higher market-level investor sentiment.
When divergence of opinion is higher, a firm is less likely to be a
takeover target, although takeover synergy in successful takeovers is
higher. Our results suggest that takeovers may play a role in explaining
high contemporaneous stock prices in the presence of high divergence of
|Appears in Collections:||Finance Working Papers|
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