LOW PRICE ANOMALY IN M&A TRANSACTIONS

• Authors: Pastusiak Radosław , Jasiniak Magdalena , Pluskota Anna
• Languages of publication: EN

Abstracts

EN

Low price anomaly describes the phenomenon in which low-priced stocks grow faster than high-priced stocks and generate higher rates of return. The aim of this article is to verify the existence of low price anomaly on the example of mergers and acquisitions of European companies. The authors’ proposal was to analyse this phenomenon in case of stocks up to 1 euro and above 100 euro. Authors proved that rate of returns differ according to price what corresponds to the literature. The study shows that in case of M&A it is more likely that the investors will gain when purchasing stocks of overtaking companies valued up to 1 euro, than those valued above 100 euro. Investments in low-priced stocks are more likely to generate higher profits than investments in high-priced stocks. However, they are also characterized by higher risk.

Keywords

EN

LOW PRICE ANOMALY; STOCK PRICES; LOW-PRICED STOCKS; MERGERS AND ACQUISITIONS; EUROPE

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2019
• Volume: 67
• Issue: 2
• Pages: 195 – 214

Contributors

author

Pastusiak Radosław

• University of Lodz, Faculty of Economics and Sociology, Rewolucji Street, No. 39, 90 214 Lodz, Poland

author

Jasiniak Magdalena

author

Pluskota Anna