Stock market driven acquisitions

Stock market driven acquisitions We present a model of mergers and acquisitions based on stock market misvaluations of the combining firms. The key ingredients of the model are the relative valuations of the merging firms and the market's perception of the synergies from the combination. The model explains who acquires whom, the choice of the medium of payment, the valuation consequences of mergers, and merger waves. The model is consistent with available empirical findings about characteristics and returns of merging firms, and yields new predictions as well. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Stock market driven acquisitions

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Publisher
Elsevier
Copyright
Copyright © 2003 Elsevier B.V.
ISSN
0304-405x
D.O.I.
10.1016/S0304-405X(03)00211-3
Publisher site
See Article on Publisher Site

Abstract

We present a model of mergers and acquisitions based on stock market misvaluations of the combining firms. The key ingredients of the model are the relative valuations of the merging firms and the market's perception of the synergies from the combination. The model explains who acquires whom, the choice of the medium of payment, the valuation consequences of mergers, and merger waves. The model is consistent with available empirical findings about characteristics and returns of merging firms, and yields new predictions as well.

Journal

Journal of Financial EconomicsElsevier

Published: Dec 1, 2003

References

  • New evidence and perspectives on mergers?
    Andrade, G.; Mitchell, M.; Stafford, E.
  • The q-theory of mergers
    Jovanovic, B.; Rousseau, P.
  • The impact of industry shocks on takeover and restructuring activity
    Mitchell, M.; Mulherin, H.
  • Do managerial objectives drive bad acquisitions?
    Morck, R.; Shleifer, A.; Vishny, R.
  • Glamour, value, and the post-acquisition performance of acquiring firms
    Rau, R.; Vermaelen, T.
  • Mergers
    Steiner, P.

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