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Review of Quantitative Finance and Accounting

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01.08.2011 | Original Research

Firm value and investment policy around stock for stock mergers

verfasst von: Adel Bino, Elisabeta Pana

Erschienen in: Review of Quantitative Finance and Accounting | Ausgabe 2/2011

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Abstract

We study a sample of publicly traded firms that expand by acquiring other firms in pure, stock-for-stock mergers. After these mergers, we find that the diversification premium decreases for the acquiring firm due to having added a target firm trading at a discount. Furthermore, the acquiring firm experiences a decrease in investment opportunities and a decrease in leverage. This is an effect confined only to non-diversifying mergers. Our results indicate that the acquirer’s investment efficiency at the firm level remains unchanged after the merger.

Vorheriger Artikel Financial disclosure, investor protection and stock market behavior: an international comparison

Nächster Artikel Australia’s equity home bias and real exchange rate volatility

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Titel: Firm value and investment policy around stock for stock mergers
verfasst von: Adel Bino
Elisabeta Pana
Publikationsdatum: 01.08.2011
Verlag: Springer US
Erschienen in: Review of Quantitative Finance and Accounting / Ausgabe 2/2011
Print ISSN: 0924-865X
Elektronische ISSN: 1573-7179
DOI: https://doi.org/10.1007/s11156-010-0201-4

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