A REEXAMINATION OF ANALYSTS EARNINGS FORECASTS FOR TAKEOVER TARGETS

We examine analysts' earnings forecasts for a sample of takeover targe ts and document that the announcement-month forecasts are systematical ly revised upward, supporting the hypothesis that a takeover announcem ent conveys favorable information about the target firm. In addition, we find that abnormal forecast revisions of future stand-alone earning s are significantly greater for targets with low Tobin's q-ratios rela tive to targets with high q-ratios, lending further support to the inf ormation hypothesis. Finally, we provide evidence that managerial resi stance to the takeover does not destroy value. Our results are in dire ct contrast to Pound (1988).