The Benefits of Overvaluation: Evidence from Mergers and Acquisitions

Vagenas‐Nanos, Evangelos

doi:10.1111/fima.12247

Cited by 5 publications

(1 citation statement)

References 62 publications

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“…Then the market timing financing has been confirmed, Alti (2006), Hovakimian (2006) and Kayhan & Titman (2007) all considered that companies have market timing behaviors when issuing securities [9][10] [11]. Vagenas (2020) believes that companies with overvalued stock prices prefer to use share-based payments, and ultimately achieve the goal of arbitrage from high-valued stocks [12].…”

Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

Research on the Impact of Timing Financing on M&A Performance: The Intermediary Effect Based on Financing Efficiency

Shang¹

2021

Frontiers in Artificial Intelligence and Applications

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Timing financing theory holds that when listed companies are overvalued, they will increase equity financing. Different from previous studies, this study explores the mechanism of timing financing theory in China from the perspective of financing efficiency. Through the empirical study of M & A cases of Listed Companies in China from 2007 to 2018, it is found that the timing financing behavior that increasing equity financing when overvalued reduces the positive impact of equity financing on M & A performance. Further research found that the mediating effect of the financing efficiency exists, that is, the timing financing behavior does no increase listed companies’ financing efficiency, so it can not help listed companies create value through M & A.

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Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

Research on the Impact of Timing Financing on M&A Performance: The Intermediary Effect Based on Financing Efficiency

Shang¹

2021

Frontiers in Artificial Intelligence and Applications

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The rationality of M&A targets in the choice of payment methods

Klitzka

Schiereck

2021

Rev Manag Sci

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This study analyzes mergers and acquisitions (M&A) payment methods in large transactions of public U.S. acquirers between 2009 and 2016. While we find consistent with previous evidence that asymmetric information between acquirers and targets significantly influences the choice of M&A payment methods, we show that contrary to prevailing findings in the literature, acquirers cannot exploit their overvaluation through stock-financed M&A at targets’ disadvantage. In addition, when facing larger uncertainty in the counterparty’s valuation, a higher ratio of cash is applied in M&A payment. Our results document that both acquirers and targets are rational in choosing M&A payment methods.

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