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Divergence of Opinion and Post-Acquisition Performance

Alexandridis, George; Antoniou, Antonios; Petmezas, Dimitris


George Alexandridis

Antonios Antoniou

Dimitris Petmezas


D Petmezas


We examine the relation between divergence of opinion about the value of the acquiring firm in the pre-acquisition announcement period and post-acquisition stock returns. We find that acquirers subject to high opinion dispersion earn lower future returns than acquirers subject to low dispersion. It appears that, on average, only acquirers in the high divergence of opinion subset experience significant negative post-event abnormal returns. In the spirit of Miller (1977), such evidence implies that high pre-event investor disagreement leads to systematic overpricing of acquirers that manifests itself through long-run underperformance of their stock. The documented misvaluation persists irrespective of the opinion divergence proxy and performance evaluation method used and after controlling for several common deal and acquirer characteristics.


Alexandridis, G., Antoniou, A., & Petmezas, D. (2007). Divergence of Opinion and Post-Acquisition Performance. Journal of Business Finance and Accounting, 34(3-4), 439-460.

Journal Article Type Article
Online Publication Date Aug 30, 2006
Publication Date 2007-07
Deposit Date Aug 19, 2008
Journal Journal of business, finance & accounting
Print ISSN 0306-686X
Electronic ISSN 1468-5957
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 34
Issue 3-4
Pages 439-460
Public URL