Cross-border transactions, mergers and the inconsistency of international reference points

Garrett C. Smith, Jeffrey M. Coy, Andrew C. Spieler

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Reference point theory is a well-established phenomenon in the behavioral economics field (Anchoring Theory). Its broad implications also extend to financial topics. For example, Baker et al. (2012) demonstrate the impact of a range of reference points related to 52-week high stock price on domestic merger and acquisition activity. The anchoring behavioral bias is universal and not limited to the United States. An investigation into the power and impact of reference points in explaining merger and acquisition activity in an international setting is valuable as firms face heterogeneous legal, regulatory, and market conditions. In addition, cross-border mergers change the legal structure of the shares of the target firm. Using the 52-week high share price of the target, this study investigates the impact of increased information asymmetry in estimating synergistic effects.

Original languageEnglish (US)
Pages (from-to)14-21
Number of pages8
JournalJournal of Behavioral and Experimental Finance
Volume22
DOIs
StatePublished - Jun 2019

Fingerprint

Reference point
Mergers
Inconsistency
Cross-border
Mergers and acquisitions
Anchoring
Market conditions
Cross-border mergers
Behavioral biases
Share prices
Stock prices
Asymmetry of information

All Science Journal Classification (ASJC) codes

  • Finance

Cite this

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Cross-border transactions, mergers and the inconsistency of international reference points. / Smith, Garrett C.; Coy, Jeffrey M.; Spieler, Andrew C.

In: Journal of Behavioral and Experimental Finance, Vol. 22, 06.2019, p. 14-21.

Research output: Contribution to journalArticle

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