The benefits of overvaluation: evidence from mergers and acquisitions

Vagenas-Nanos, E. (2020) The benefits of overvaluation: evidence from mergers and acquisitions. Financial Management, 49(1), pp. 91-133. (doi: 10.1111/fima.12247)

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Theoretical and empirical evidence debates on whether acquirers can exploit their overvalued equity and create value by purchasing less overvalued or undervalued target firms. Shleifer and Vishny (2003) and Savor and Lu (2009) argue in favor of this, while Fu et al. (2013) and Akbulut (2013) provide evidence against. We revisit this issue and develop a quasi‐experimental design. The misvaluation effect for stock acquirers that are more overvalued than their targets is isolated and measured. Our findings offer direct evidence in favor of the Shleifer and Vishny (2003) market timing hypothesis.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Vagenas-Nanos, Professor Evangelos
Authors: Vagenas-Nanos, E.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Financial Management
ISSN (Online):1755-053X
Published Online:14 August 2018
Copyright Holders:Copyright © 2018 Financial Management Association International
First Published:First published in Financial Management 49(1):91-133
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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