Liquidity and firm characteristics: Evidence from mergers and acquisitions

Lipson, Marc L.; Mortal, Sandra

doi:10.1016/j.finmar.2006.09.004

Cited by 39 publications

(11 citation statements)

References 42 publications

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“…The mean effective and quoted spreads of acquirers also decline significantly ( t ‐values = –4.51 and –5.19), although the magnitude of the decline for acquirers is substantially smaller than that for targets. Our results are consistent with the finding of Lipson and Mortal () that bidders’ spreads decline around mergers and acquisitions. They show that decreases in bidders’ spreads can be explained by concurrent changes in the number of analysts, number of shareholders, number of market makers, firm size, trading volume and return volatility.…”

Section: Liquidity Changes Around Mergers and Tender Offerssupporting

confidence: 92%

“…Ascioglu et al () show that trading volume and stock returns are abnormally high before the merger announcement and spreads are narrower after the announcement. Lipson and Mortal () analyze the relationship between liquidity changes and changes in firm characteristics for bidders around mergers and acquisitions. They show that mergers and acquisitions are generally associated with reductions in spreads for bidders but those reductions are fully explained by concurrent changes in stock attributes .…”

Section: Introductionmentioning

confidence: 99%

“…Lipson and Mortal () do not examine the effect of mergers and acquisitions on the liquidity of target firms.…”

mentioning

confidence: 99%

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Liquidity and Returns to Target Shareholders in the Market for Corporate Control: Evidence from the US Markets

Lee

Chung

2013

Business Fin & Account

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In this paper we analyze how stock market liquidity affects the abnormal return to target firms in mergers and tender offers. We predict that target firms with poorer stock market liquidity receive larger announcement day abnormal returns based on the following considerations. First, target firms with poorer stock market liquidity receive greater liquidity improvements after a merger or tender offer. Second, deals that involve less liquid targets are less anticipated and/or more likely to be completed. Third, less liquid stocks have more diverse reservation prices across shareholders and thus require a higher takeover return. Consistent with these expectations, we show that abnormal returns to target firms’ shareholders are significantly and positively related to the difference in liquidity (measured by the bid‐ask spread) between acquirers and targets as well as the magnitude of target firms’ liquidity improvement.

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Section: Liquidity Changes Around Mergers and Tender Offerssupporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

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Liquidity and Returns to Target Shareholders in the Market for Corporate Control: Evidence from the US Markets

Lee

Chung

2013

Business Fin & Account

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“…Kalev, Pham, Steen (2003), Dennis and Strickland (2003), Cao, Field, and Hanka (2004), Lipson and Mortal (2004a), Schrand and Verrecchia (2004), Lesmond, Lemma, and O'Connor (2005), and many others examine the impact of corporate finance events on stock liquidity. Heflin and Shaw (2000), Lipson and Mortal (2004b), Lerner and Schoar (2004), and many others examine the influence of liquidity on capital structure, security issuance form, and other corporate finance decisions.…”

Section: Empirical Designmentioning

confidence: 99%

Do Measures of Liquidity Measure Liquidity?

2008

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“…Mergers and acquisitions can lead to substantial changes in firm characteristics, including size and scope of operations (Lipson and Mortal 2006). Each business merged together or acquired typically has its own legacy information system, which may not be compatible with other company systems.…”

Section: Earnings Release Date Managementmentioning

confidence: 99%

The Effect of ERP System Implementations on the Management of Earnings and Earnings Release Dates

Brazel

Dang

2008

Journal of Information Systems

136

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ERP systems have become the system of choice for the majority of publicly traded companies and have radically changed the way accounting information is processed, prepared, audited, and disseminated. In this study, we examine whether ERP system implementations have affected the extent to which firms manage earnings amounts and release dates. We find, for a sample of ERP adopters, that implementations led to increases in the absolute value of discretionary accruals (i.e., greater earnings management). We also find a positive relationship between the extent of ERP module adoption and the extent of earnings management. With respect to earnings release dates, firms with incentives to increase the timeliness of their release dates experienced a decrease in reporting lag after implementing ERP systems. These results should be of interest to financial statement preparers initially adopting or implementing new versions of ERP applications, auditors serving clients with ERP systems, and regulators overseeing the financial markets and consolidation in the ERP industry.

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Liquidity and firm characteristics: Evidence from mergers and acquisitions

Cited by 39 publications

References 42 publications

Liquidity and Returns to Target Shareholders in the Market for Corporate Control: Evidence from the US Markets

Liquidity and Returns to Target Shareholders in the Market for Corporate Control: Evidence from the US Markets

Do Measures of Liquidity Measure Liquidity?

The Effect of ERP System Implementations on the Management of Earnings and Earnings Release Dates

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