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Impact of takeover bid rumours on liquidity : the case of canadian target firms

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Diarrassouba, Kymifo Nafissa (2018). Impact of takeover bid rumours on liquidity : the case of canadian target firms. Mémoire. Gatineau, Université du Québec en Outaouais, Département des sciences administratives, 102 p.

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Résumé

By essence, rumours are known to carry uncertain and unverified information. However, despite their lack of reliability, rumours significantly affect the behavior of their “public”; subsequently leading to major impacts on individuals, industries, and even societies at large. The impact of rumours ultimately lies with people’s perception and reaction to them rather than the veracity of the information they carry. In the financial market, takeover rumours have often proven to have significant and atypical consequences on the rumoured target firms before an actual takeover bid is announced. This study examines the short-term impact of takeover rumours on the stock prices and the liquidity of Canadian target firms listed on the Toronto Stock Exchange. We collect the data on 21 published takeover rumors between 1998 and 2015. We find that this type of unofficial information can significantly affect the target companies; leading to abnormal prices and trading volumes around the date of their appearance in the media (websites, newspapers, newsletters, and other published sources). The best performance of target shares is observed one day before the dissemination of the rumours in the media, with an average daily return of 0.0318. However, on the day of the publication itself, no significant reaction can be observed in the market. Those results are similar to the findings of Zivney, Bertin, & Torabzadeh (1996) for rumours published in both the HOTS and the “Abreast of the Market” (AOTM) column in the Wall Street Journal.

Type de document: Thèse (Mémoire)
Directeur de mémoire/thèse: Barroso Da Graça, Tarcisio
Mots-clés libres: Takeover rumours; Financial rumours; Canadian targets; Event study
Départements et école, unités de recherche et services: Sciences administratives
Date de dépôt: 07 janv. 2020 18:23
Dernière modification: 07 janv. 2020 18:23
URI: http://di.uqo.ca/id/eprint/1134

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