Price pressure around mergers
By: Mark Mitchell, Todd Pulvino, Erik Stafford
Contributors: Stafford, Erik; Pulvino, Todd; Harvard Business School. Division of Research
Series: Working paper / Division of Research, Harvard Business School -- 03-029; Working paper (Harvard Business School. Division of Research) -- 03-029
Publisher: Division of Research, Harvard Business School
Published: 2002
Place of publication: Boston]
Language: eng
Number of pages: 40
Description: This paper examines the trading behavior of professional investors around 2,130 mergers announced between 1994 and 2000. We find considerable support for the existence of price pressure around mergers caused by uniformed shifts in excess demand, but that these effects are fairly short-lived, consistent with the notion that short0run demand curves for stocks are not perfectly elastic. We estimate that roughly one half of the negative announcement period stock price reaction for acquirers in stock-financed mergers reflects downward price pressure caused by merger arbitrage short selling.
Notes: "August 2002."

Includes bibliographical references.