Market valuation and merger waves

• 成果类型: Article
• 署名作者: Rhodes-Kropf, M; Viswanathan, S
• 署名单位: Columbia University; Duke University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2004.00713.x
• 发表日期: 2004
• 页码: 2685-2718
• 关键词: exchange; auctions; INFORMATION; CHOICE

摘要

Does valuation affect mergers? Data suggest that periods of stock merger activity are correlated with high market valuations. The naive explanation that over-valued bidders wish to use stock is incomplete because targets should not be eager to accept stock. However, we show that potential market value deviations from fundamental values on both sides of the transaction can rationally lead to a correlation between stock merger activity and market valuation. Merger waves and waves of cash and stock purchases can be rationally driven by periods of over- and undervaluation of the stock market. Thus, valuation fundamentally impacts mergers.