Do acquirers’ stock prices fully react to the acquisition announcement of listed versus unlisted target firms? Out-of-sample evidence from Spain

Previous results are ambiguous about whether prices fully reflect value creation or destruction at the time of the acquisition announcement when samples are split into listed and unlisted target firms. We find that the Spanish market fully reacts to the acquisition announcement (showing value creation only for unlisted target firm acquisitions), except for the smallest bidders of public targets since we find significant positive abnormal returns for a 24-month post-acquisition window. This evidence is consistent with investors extrapolating the performance of large acquirers of public firm to smaller ones and, therefore, only identifying value creation in the long term.