Research studies have found that the share prices of both target firms and acquiring firms react very positively to announcements of an acquisition.

Question

Quizplus · Accepted Answer

While research studies often find that the share prices of target firms react positively to announcements of an acquisition, the share prices of acquiring firms have a more mixed or even negative reaction. This is because acquisitions can involve significant costs and risks for the acquiring firm.

Research Studies Have Found That the Share Prices of Both