Search results

The purpose of this paper is to examine trading costs of both acquiring firms and target firms differentiated by method of payment, mode of acquisition, and deal attitude around merger and acquisition (M&A) announcements. The author calculates four spread measures of trading costs: quoted spread, percentage quoted spread, effective spread, and percentage effective spread.

Differences in spreads differentiated by M&A characteristics are calculated and two‐sample t‐tests applied. A linear regression model is developed to test whether changes in trading costs are related to acquiring firm's post‐merger price performance. The regression is estimated by OLS method.

It is found that various methods of payment affect the spreads of target firm differently on certain days around M&A announcement. For acquiring firms, significant differences are found in spreads between cash offers and stock offers, and between stock offers and mix offers. Significant difference was not found in spreads between cash offers and mix offers. The mode of acquisition affects the bid‐ask spreads of target firms only, but not those of acquiring firms. Deal attitudes affect the spreads of target firms on and after M&A announcements. It was also found that all four spread measures are significantly linked to acquiring firms’ post‐merger daily returns.

Further study can be done on mechanisms through which M&A characteristics impact trading costs.

This study suggests that M&A characteristics affect firms’ spreads and that changes in spreads need to be accounted for in explaining acquiring firms’ post‐merger daily returns.

The paper fills in an important gap in existing literature by examining trading costs of acquiring firms around M&A announcements. It provides additional evidence on the anomaly of acquiring firm's negative post‐merger returns. The paper is intended to help improve the understanding of trading costs and the behavior of the market participants in response to a major corporate event.

The purpose of this paper is to examine changes in short‐sale transactions of target firms and acquiring firms around merger and acquisition (M&A) announcements using daily short‐sale transaction data from the New York stock exchange and NASDAQ. The paper further aims to investigate the link between short‐sale transactions and trading costs.

Two abnormal short‐sale measures are developed. Two regression models based on the two short‐sale measures are constructed and ordinary least squares is used to estimate the regressions. Two samples to test bid‐ask spreads (BAS) before and after M&A announcements t‐test are used.

The paper finds that target firms experience significant excess short sales (ES) from day−1 to day+7; while acquiring firms experience significant ES from day 0 to day+20. For acquiring firms, the five‐day pre‐announcement abnormal short sale is negatively related to the announcement day return and is positively related to post‐announcement return. Such a relationship for target firms is not observed. For target firms, it is found that changes in short activity are not significantly related to changes in trading cost. For acquiring firms, short activity changes are positively related to quoted spreads and percentage quoted spreads. The short‐sale activity changes are negatively related to effective spreads.

The paper is a first step to understanding whether short sales affect market liquidity around M&A announcements; therefore restriction is necessary. Additional research can be done which should extend the current study to include the options market.

From the results, the paper cannot conclude that short sellers are informed traders around M&A announcements. Therefore restrictions on short sales around M&A announcements may not be warranted.

The paper fills an important blank in the existing literature by examining short‐sale transactions around M&A announcements. Such an investigation is of particular interest to market regulators as they try to update the short‐sale rules.

The present situation is marked by the threat of COVID-19 pandemic on entire humankind and researchers across the globe are looking forward to vaccines or medicines to tackle COVID-19. However, according to the scholars and health-care agencies, vaccines alone would not be of much help and in the longer run adhering to the physical distancing policy along with sanitation could be the only solution. Moreover, extant studies across different areas have noted a positive association between various human psychological factors and prosocial behaviours. Additionally, an empirical study undertaken in the western context has tried exploring the association between human psychological factors and physical distancing behaviour (a kind of prosocial behaviour) in the COVID-19 context. The results of the extant study seem intriguing and encouraging enough to undertake a more robust exploratory study in this developing area. Against this background, this study aims to explore the relationship between individuals’ mindfulness and physical distancing behaviour, along with the mediating role of empathy during the COVID-19 pandemic.

To achieve the study objectives, this study has used an online survey method and has collected responses from the general adult population in India spread across all six regions. The survey was conducted during May 2020 when India was under a nationwide lockdown to mitigate the risk of COVID-19 pandemic. The respondents were identified based on convenience and snowball sampling techniques. Using social media platforms, the prospective respondents were contacted through WhatsApp, LinkedIn and Facebook or e-mails. Post data cleaning, a total of 315 responses were found to be suitable for analysis. For analysis, confirmatory factor analysis was conducted to establish the validity and reliability of the conceptual model, whereas Pearson correlation was undertaken to study the relationship between variables and mediation was examined using the PROCESS macro of Hayes.

The findings were encouraging and could become the foundation stone for further research and a practical guide for policymakers, agencies working in the health-care areas and even corporate leaders. As expected, an individual’s mindfulness was noted to be positively-related and influencing physical distancing behaviour. The mediation analysis indicated the intervening role of empathy in the association between an individual’s mindfulness and physical distancing behaviour.

The findings of the present could be a game-changer in restricting the spread of the COVID-19 pandemic. As espoused by various scholars, as well as health-care organizations about the use of physical distancing in mitigating the risk of COVID-19, policymakers, health-care authorities and even corporate leaders could look forward to strategizing and execute the dissemination of various mindfulness-based programs among the individuals. These mindfulness-based programs, which could be disseminated offline and online through smartphones, could, in turn, help in positively influence physical distancing behaviour among the individuals leading to the success of physical distancing policy.

This study relates and extends the mechanism of mindfulness in influencing individuals’ physical distancing behaviour in the pandemic situation, notably the COVID-19 pandemic. Moreover, based on the “empathy-altruism hypothesis”, as well as Schwartz’s theory of fundamental values, the intervening role of empathy has been explored and the findings further helped in extended these two theories in the domain of pandemic.

This study could be the first to conceptualize and examine the human psychological factors, particularly the relationship and role of an individual’s mindfulness with physical distancing behaviour among the general public during the COVID-19 pandemic. Additionally, this could also be the first study to conceptualize and explore the intervening role of empathy in the relationship between an individual’s mindfulness and physical distancing behaviour. Moreover, in conceptualizing and exploring the relationship between an individual’s mindfulness and physical distancing behaviour, this study explored and extended the “reperceiving” mechanism of mindfulness and the “empathy-altruism hypothesis” along with Schwartz’s theory of fundamental values in the domain of pandemic.