Coakley, J and Gazzaz, H and Thomas, H (2017) The impact of mispricing and growth on UK M&As. European Journal of Finance, 23 (13). pp. 1219-1237. DOI https://doi.org/10.1080/1351847X.2016.1206585
Coakley, J and Gazzaz, H and Thomas, H (2017) The impact of mispricing and growth on UK M&As. European Journal of Finance, 23 (13). pp. 1219-1237. DOI https://doi.org/10.1080/1351847X.2016.1206585
Coakley, J and Gazzaz, H and Thomas, H (2017) The impact of mispricing and growth on UK M&As. European Journal of Finance, 23 (13). pp. 1219-1237. DOI https://doi.org/10.1080/1351847X.2016.1206585
Abstract
This paper investigates the impact of mispricing and growth on salient aspects of 434 UK merger and acquisition (M&A) deals over the 1990-2009 period. Mispricing is proxied by both the 26-week high price and misvaluation given the deviation of target price from its estimated fundamental value. One or both of these variables has a significantly pervasive influence on all aspects of M&As studied. The target 26-week high price, misvaluation and growth all have a significant effect on both the offer premium and whether bidders pay with cash or stock for the full sample. The 26-week high price is the main driver for the overvalued (price exceeds value) target sub-sample and growth prospects for the undervalued target sub-sample. Short run abnormal returns around the announcement are driven by misvaluation only while offers in excess of the 26-week high and of fundamental value increase the probability of deal success.
Item Type: | Article |
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Uncontrolled Keywords: | Undervaluation; overvaluation; psychological reference points; mergers |
Subjects: | H Social Sciences > HG Finance |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 30 Jun 2016 12:48 |
Last Modified: | 16 May 2024 17:53 |
URI: | http://repository.essex.ac.uk/id/eprint/17024 |
Available files
Filename: The Impact of Mispricing and Growth on UK Mergers and Acquisitions_EJF.pdf