Empirical Evaluation of Investor Rationality in the Case of Merger and Acquisition

Sumber :	Akuntabilitas : Jurnal Ilmiah Akuntansi
Penerbit :	Jurusan Akuntansi Universitas Pancasila
Tahun Terbit Artikel:	2007
Volume :	7
No :	1
Halaman :	45-50
Kata Kunci :	Investors; Mergers; Acquisitions
Abstrak :	The Objective of the study is to test whether investors are fully rational or not. Quick responses of the investors on certain economic events do reflect accurately the impact of the event on the long term corporate performance. The study is built upon the overreaction hypotheses in the prior studies. The researcher argues that the evaluation of investor rationality based on the temporary responses. of the investors, which was commonly done in prior studies, is really inappropriate. Furthermore, the researcher argues that the exact measure of the goodness if the investor reaction can then be known only after being compared with the long term impact of the events. To test the proposition of the study investigates if the size of CAR which reflects, investors short-term reaction on an event posses a predictive value (i.e., reflects the potential long tenn economic consequences). The study finds that despite the significant size of CAR surrounding merger and acquisition events, the CAR size can not be used to predict long term corporate performance. Simons cognitive limitation model is used to theorize the phenomenon.
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