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Misvaluation and UK mergers 1986?2002

Coakley, J and Fu, L and Thomas, H (2010) 'Misvaluation and UK mergers 1986?2002.' Applied Financial Economics, 20 (3). pp. 201-211. ISSN 0960-3107

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We provide evidence that ex ante misvaluation matters for merger activities in the UK 1986?2002 using a sample of 302 bidders and targets. Sector or long-run misvaluation causes merger firms to be more overvalued than nonmerger firms. Acquirers are overvalued absolutely and relative to targets which are themselves absolutely undervalued. Bidders use mergers to purchase the superior long-term growth prospects of targets. Finally our probit regression results provide evidence that misvaluation drives merger waves in the UK.

Item Type: Article
Uncontrolled Keywords: Misvaluation; M&A; market-to-book ratio; acquisitions
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 18 Dec 2012 11:06
Last Modified: 15 Jan 2022 01:05

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