Misvaluation and Financial Constraints: Method of Payment and Buyer Identity in Mergers & Acquisitions
The paper studies how stock price misvaluation and financial frictions affect whether an acquisition occurs between or within industries and whether the acquirer pays in cash or stocks. I set up a model where stock market misvaluation correlates within industries and across industries and assume that managers have private information regarding their own firm and firms similar to it. The model yields predictions regarding which firm acquires which firm, and the method of payment used in transactions.
|Date of creation:||15 Mar 2017|
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- repec:hrv:faseco:30748164 is not listed on IDEAS Full references (including those not matched with items on IDEAS)
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