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Information sensitivity of high tech industries: evidence from merger announcements

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Abstract:

The uncertain nature of technological innovation and a potential misunderstanding of the complexities of high tech operations can lead to much speculation about the true worth of high tech firms. This valuation uncertainty is expected to heighten the information sensitivity of investors in high tech industries. To examine this prediction, this article investigates factors that influence the impact of high tech merger announcements on intra-industry firm valuations. The results show that investors in industry-related firms are highly sensitive to merger announcements involving high tech targets and that the industry responses are even stronger in takeovers with high information impact factors.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0960310042000216088

Affiliations: 1: Department of Finance University of South Florida 4202 East Fowler Avenue BSN 3403 Tampa FL 33620-5500 USA 2: College of Business and Industry Mississippi State University Mississippi State MS 39762-0964 USA

Publication date: April 1, 2004

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