The effect of stock misvaluation and investment opportunities on the method of payment in mergers

Giuli, Alberta Di

doi:10.1016/j.jcorpfin.2013.02.002

Cited by 27 publications

(24 citation statements)

References 35 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…So the company management considers the interests of most shareholders and the company"s development. Giuli (2013) suggested that compared to cash payment method, mergers with stock payment can acquire better investment opportunities. Micah et al (2009) used information asymmetry theory, Zhou (2015 used the transfer effect theory to discuss the relationship between cash payment methods and M&A performance, stock payment methods and M&A performance, and they all obtained the stock payment method was better.…”

Section: Introductionmentioning

confidence: 99%

Research on the Correlation between Payment Methods of M&A and M&A Performance of Listed Company

Yiping¹,

Ma²

2018

IJEF

View full text Add to dashboard Cite

As mergers and acquisitions of listed companies have become increasingly active, payment methods of M&A have also increasingly diversified. This article takes M&A cases of listed companies in china capital market as samples during 2009 to 2013. Taking financial indexes analysis and factor analysis, we can construct M&A performance comprehensive score model, by which we can calculate the score. Then, build multiple regression model to study the relation between the performance of M&A and payment methods of M&A. Studies indicate that M&A performance is stable by the cash payment method and the cash payment method has a small effect on the M&A performance; M&A performance improves obviously by the stock payment method and mixed payment is not conducive to the improvement of long-term performance; The stock payment method has a huge positive effect on the M&A performance, and the mixed payment is not beneficial to improve the M&A performance.

show abstract

Section: Introductionmentioning

confidence: 99%

Research on the Correlation between Payment Methods of M&A and M&A Performance of Listed Company

Yiping¹,

Ma²

2018

IJEF

View full text Add to dashboard Cite

show abstract

“…The methodology design of this study is informed by several earlier studies, namely, Moeller, et al (2007), ), Cao and Madura (2011, and Di Giuli (2013), who study the medium of exchange choice under information asymmetry. In this setting, the bidder has private information on its own value and makes a bid for the target, who has private information on its own value which impacts the accept/reject decision.…”

Section: Methodsmentioning

confidence: 99%

“…In this setting, the bidder has private information on its own value and makes a bid for the target, who has private information on its own value which impacts the accept/reject decision. Given that the bidder leads the decision on the method of payment (Di Giuli, 2013), this study focuses on the bidder as the initiator of the deal quality and misvaluation signals.…”

Section: Methodsmentioning

confidence: 99%

“…Di Giuli (2013) An examination of firms' mispricing and investment opportunities on the method of payment in mergers.…”

Section: Nomentioning

confidence: 99%

“…Employing a sample construction approach proposed by , this study controls for both endogeneity and industry effects in the analysis of the information content of the medium of exchange choice. Since the bidding firm ultimately steers the medium of exchange choice (Di Giuli, 2013), this study focuses on the bidding firm in the medium of exchange choice. The deal quality hypothesis is tested from two perspectives.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Three Essays on Mergers and Acquisitions: Negative Premium, Failed Mergers, and Deal Quality Implications of Medium of Exchange

Oldford¹

View full text Add to dashboard Cite

Mergers and acquisitions (M&A) are important economic events. They not only transform firms and industries but also have significant wealth implications for shareholders. In the past decade, investment in merger and acquisition activity has reached unprecedented levels, and the increase in M&A activity and the economic significance of this form of corporate restructuring provide the fundamental motivation for the study of the antecedents and consequences of mergers and acquisitions. In particular, this thesis is motivated by three areas within the M&A literature that demand further research, and it intends to address these gaps in the literature in three separate but interrelated essays. The results from the first essay provides evidence that while target firm's financial distress and overvaluation permit the bidder to offer a negative acquisition premium, it is the combination of the negative market reaction to the negative premium bid (resulting in a convergence of the target's stock price to bid price) and high block ownership (resulting in lower share liquidity) that lead target shareholders to prefer the negative premium bid over selling at market prices. The second essay investigates the issue of long-run post-acquisition underperformance, and contributes evidence to the literature that target firms in terminated deals not only outperform their own pre-acquisition performance but also outperform financial and operating performance of targets in completed deals. The third essay investigates the issue medium of exchange choice (i.e., cash or stock) under conditions of asymmetric information. This third essay reports evidence that the information content of announcement returns of bidding firms in stock financed deals is associated with the bidder valuation and the quality of the combination, but only the quality of the combination for cash bidders. The three essays, though investigating different aspects of the construction of the acquisition bid, each identify that the deal construction (e.g., deal consideration, medium of exchange) and deal outcomes (e.g., failure or success) is a key determinant of post-combination outcomes, both in terms of financial and operating performance.ii

show abstract

Bibliography

2017

Location Strategies and Value Creation of International Mergers and Acquisitions

View full text Add to dashboard Cite

The effect of stock misvaluation and investment opportunities on the method of payment in mergers

Cited by 27 publications

References 35 publications

Research on the Correlation between Payment Methods of M&A and M&A Performance of Listed Company

Research on the Correlation between Payment Methods of M&A and M&A Performance of Listed Company

Three Essays on Mergers and Acquisitions: Negative Premium, Failed Mergers, and Deal Quality Implications of Medium of Exchange

Bibliography

Contact Info

Product

Resources

About