While stock prices of firms almost always go up immediately after an announcement of a takeover bid by another company, a new study shows that theres a lot of variation in just how far the stock prices may change.
In fact, the study showed that about one-quarter of stock prices actually go higher than the initial bid price announced by the acquiring firm. Overall, investors seem to be savvy about pricing stocks of target firms, said Ralph Walkling, co-author of the study and professor of finance at Ohio State Universitys Fisher College of Business. "We found that the market is very good at determining whether a proposed acquisition deal is going to go through, how long it is going to take, and the final price," he said. Walkling conducted the study with Jan Jindra from Cornerstone Research in Menlo Park, Calif. Their study was published in a recent issue of the Journal of Corporate Finance.
The researchers studied 362 cash tender offers between 1981 and 1995 in the United States in which the bidding firm was attempting to own 100 percent of the target firm. These were all cases in which the target firm was listed on the NYSE, AMEX or NASDAQ exchanges, and the total value of the transaction exceeded $10 million. Walkling said he and Jindra were interested in the "speculation spread" – the difference between how much the acquiring firm bid on the target firms stock, and the price of that stock at the end of the first trading day after the announcement. For example, if the acquiring firm bid $40 a share for the target firms stock, and that stock rose to $38 the day after the announcement, the speculation spread is $2.
Ralph Walkling | EurekAlert!
The personality factor: How to foster the sharing of research data
06.09.2017 | ZBW – Leibniz-Informationszentrum Wirtschaft
Europe’s Demographic Future. Where the Regions Are Heading after a Decade of Crises
10.08.2017 | Berlin-Institut für Bevölkerung und Entwicklung
Plants and algae use the enzyme Rubisco to fix carbon dioxide, removing it from the atmosphere and converting it into biomass. Algae have figured out a way to increase the efficiency of carbon fixation. They gather most of their Rubisco into a ball-shaped microcompartment called the pyrenoid, which they flood with a high local concentration of carbon dioxide. A team of scientists at Princeton University, the Carnegie Institution for Science, Stanford University and the Max Plank Institute of Biochemistry have unravelled the mysteries of how the pyrenoid is assembled. These insights can help to engineer crops that remove more carbon dioxide from the atmosphere while producing more food.
A warming planet
Our brains house extremely complex neuronal circuits, whose detailed structures are still largely unknown. This is especially true for the so-called cerebral cortex of mammals, where among other things vision, thoughts or spatial orientation are being computed. Here the rules by which nerve cells are connected to each other are only partly understood. A team of scientists around Moritz Helmstaedter at the Frankfiurt Max Planck Institute for Brain Research and Helene Schmidt (Humboldt University in Berlin) have now discovered a surprisingly precise nerve cell connectivity pattern in the part of the cerebral cortex that is responsible for orienting the individual animal or human in space.
The researchers report online in Nature (Schmidt et al., 2017. Axonal synapse sorting in medial entorhinal cortex, DOI: 10.1038/nature24005) that synapses in...
Whispering gallery mode (WGM) resonators are used to make tiny micro-lasers, sensors, switches, routers and other devices. These tiny structures rely on a...
Using ultrafast flashes of laser and x-ray radiation, scientists at the Max Planck Institute of Quantum Optics (Garching, Germany) took snapshots of the briefest electron motion inside a solid material to date. The electron motion lasted only 750 billionths of the billionth of a second before it fainted, setting a new record of human capability to capture ultrafast processes inside solids!
When x-rays shine onto solid materials or large molecules, an electron is pushed away from its original place near the nucleus of the atom, leaving a hole...
For the first time, physicists have successfully imaged spiral magnetic ordering in a multiferroic material. These materials are considered highly promising candidates for future data storage media. The researchers were able to prove their findings using unique quantum sensors that were developed at Basel University and that can analyze electromagnetic fields on the nanometer scale. The results – obtained by scientists from the University of Basel’s Department of Physics, the Swiss Nanoscience Institute, the University of Montpellier and several laboratories from University Paris-Saclay – were recently published in the journal Nature.
Multiferroics are materials that simultaneously react to electric and magnetic fields. These two properties are rarely found together, and their combined...
19.09.2017 | Event News
12.09.2017 | Event News
06.09.2017 | Event News
22.09.2017 | Life Sciences
22.09.2017 | Medical Engineering
22.09.2017 | Physics and Astronomy