RESEARCH ARTICLE
New blockholder and investor limited attention: Evidence from private acquisitions
Mehmet E. Akbulut,
Emily Jian Huang,
Qingzhong Ma,
Athena Wei Zhang,
Mehmet E. Akbulut
Department of Finance, Mihaylo College of Business and Economics, SGMH5194, California State University Fullerton, Fullerton, California, USA
Search for more papers by this authorEmily Jian Huang
College of Business, California State University, Chico, California, USA
Search for more papers by this authorCorresponding Author
Qingzhong Ma
College of Business, California State University, Chico, California, USA
Correspondence
Qingzhong Ma, College of Business, California State University, Chico, CA, USA.
Email: [email protected]
Search for more papers by this authorAthena Wei Zhang
College of Business, California State University, Chico, California, USA
Search for more papers by this authorMehmet E. Akbulut,
Emily Jian Huang,
Qingzhong Ma,
Athena Wei Zhang,
Mehmet E. Akbulut
Department of Finance, Mihaylo College of Business and Economics, SGMH5194, California State University Fullerton, Fullerton, California, USA
Search for more papers by this authorEmily Jian Huang
College of Business, California State University, Chico, California, USA
Search for more papers by this authorCorresponding Author
Qingzhong Ma
College of Business, California State University, Chico, California, USA
Correspondence
Qingzhong Ma, College of Business, California State University, Chico, CA, USA.
Email: [email protected]
Search for more papers by this authorAthena Wei Zhang
College of Business, California State University, Chico, California, USA
Search for more papers by this authorFirst published: 19 July 2024
Abstract
In acquisitions of private firms, new blockholders (NewBs) are expected to form when substantial stocks are paid. Investors react strongly to a NewB signal, given the perceived monitoring and certification benefits. However, they largely ignore value-relevant but less salient signals, such as the true quality of the acquisition. Investors' limited attention allows financially weak firms to adopt the NewB strategy and take speculative deals. Our results support this inattention hypothesis: NewB acquirers are financially weaker and earn higher announcement-period returns, but lower long-run returns; moreover, acquirers' financial weakness negatively predicts long-run performance.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
Supporting Information
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Appendix S1. |
Please note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article.
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