Mergers & Acquisitions Superstition Effects and IPO Long-term Performance

Abstract

Hirshleifer Jian and Zhang (2016) suggest that newly listed Chinese firms with lucky listing codes suffer inferior post-IPO abnormal returns within 3 years Based on their findings this study further investigates the contribution to lucky listed firms’ IPO underperformance from the capital investment field The results show that the proportion of firms involved in M&A within three years after IPO from lucky listed firms significantly higher than that from unlucky listed firms Also lucky listed firms invest more money on M&A and engage in more times of M&A than unlucky listed firms Further firms engage in M&A significantly underperform than firms don’t conduct M&A whether firms have lucky listing codes or unlucky listing codes And for firms which engage in M&A the IPO performance of lucky listed firms isn’t inferior to that of unlucky listed firms The evidence supports that M&A plays a conspicuous role in newly listed firms’ long-term lower stock returns and it might be a more important contribution to IPO underperformance than superstition effect

Date of Award	2018 Jun 29
Original language	English
Supervisor	Shao-Chi Chang (Supervisor)