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Merger momentum and market valuations: the UK evidence

Antoniou, Antonios; Guo, Michael (Jie); Petmezas, Dimitris


Antonios Antoniou

Dimitris Petmezas


D Petmezas


This study examines the effect of merger momentum on acquirer's returns both in the short and long-run. The focus is on high valuation markets and the source of momentum is investigated employing three different hypotheses: the neoclassical hypothesis, the hubris hypothesis and the investor sentiment theory. Evidence is provided that supports the investor sentiment (optimism) hypothesis since it is demonstrated that investors earn significant gains in the short run but returns are reversed in the long-run as initial expectations may not be fully met when combined firms' accomplishments become known over time. The results are robust after controlling for several acquirer and deal characteristics.


Antoniou, A., Guo, M. (., & Petmezas, D. (2008). Merger momentum and market valuations: the UK evidence. Applied financial economics, 18(17), 1411-1423.

Journal Article Type Article
Publication Date Jan 1, 2008
Deposit Date May 22, 2009
Journal Applied Financial Economics
Print ISSN 0960-3107
Electronic ISSN 1466-4305
Publisher Routledge
Peer Reviewed Peer Reviewed
Volume 18
Issue 17
Pages 1411-1423
Public URL