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Does Bidder Complexity Affect Market Reactions to M&A Decisions?

Rajib Chowdhury & John A. Doukas

International Review of Finance2026https://doi.org/10.1111/irfi.70066article
ABDC A
Weight
0.50

Abstract

We examine whether and how bidder complexity influences investor reactions to merger and acquisition (M&A) announcements. Using an established measure of complexity, we find a significant positive relationship between acquiring firm complexity and cumulative abnormal returns (CAR). This suggests that investors perceive more complex firms as capable and value‐enhancing participants in M&A activities. The association is particularly strong for bidders with high operating risk, greater R&D intensity, and larger firm size. We also find that complex bidders tend to offer higher takeover premiums. Overall, our study contributes to the literature by demonstrating that bidder complexity is an important determinant of market reactions to M&A announcements.

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https://doi.org/https://doi.org/10.1111/irfi.70066

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@article{rajib2026,
  title        = {{Does Bidder Complexity Affect Market Reactions to M&A Decisions?}},
  author       = {Rajib Chowdhury & John A. Doukas},
  journal      = {International Review of Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/irfi.70066},
}

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Does Bidder Complexity Affect Market Reactions to M&A Decisions?

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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