원문정보
초록
영어
This study investigates investor misvaluation as a motivation for closed-end fund mergers and acquisitions (M&As). Following previous studies, I view the closed-end fund discount as a proxy for investor misvaluation at the individual fund level. When a closed-end fund suffers from investor misvaluation in the stock market, closed-end fund M&As can be served to investors to signal a rosy prospect for the closed-end fund, or a synergy effect. Using comprehensive data of closed-end fund M&As from 1994 through 2009, I find that (1) both acquirer and target funds experience deep fund discounts over pre-announcement periods and (2) acquirer funds are less likely to be undervalued than target funds, and target funds are more deeply undervalued than acquirer funds when M&As occur. After M&A announcements, fund discounts shrink for targets, but go slightly deeper for acquirers. In the long run, fund discounts of the combined funds shrink even for acquirers, and the misvaluation on acquirer and target closed-end funds is corrected. Post-merger objective-adjusted performance initially improves for both acquirer and target funds because of the synergies perceived by investors, but generally worsens on average in the third year following the M&As.
목차
1 Introduction
2 Hypotheses and Discussion
2.1 Empirical predictions of the investor misvaluation hypothesis
2.2 Signaling incentives by fund managers
2.3 The medium of payment in closed-end fund M&As
3 Literature Review
3.1 Determinants of mutual fund M&As
3.2 Investor misvaluation hypothesis of takeovers
3.3 Closed-end fund discounts puzzle and characteristics of closed-end funds
4 Description of Variables and Data
5 Empirical Results
5.1 Who buys whom in the closed-end fund M&As?
5.2 Post-merger performance and propensity-score matching
6 Conclusions
References
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