Does Stock Misvaluation Drive the Motivation for Takeovers?
Date Issued
2008
Date
2008
Author(s)
Hsu, Bai-Jia
Abstract
This paper uses pre-offer market valuations to evaluate motivation for takeovers under misvaluation theory. According to previous literature, the motives for merger and acquisition consist of synergy, agency, and hubris. We distinguish three hypotheses by looking at the correlation between target and both acquirer wealth gains and total wealth gains. We found bidder valuations are related to means of payment and the motivation of merger, overvalued (higher P/B) bidders incline to merge by stock and have agency problem, provides evidence for the misvaluation hypothesis.
Subjects
misvaluation
merger motivation
synergy
agency
hubris
Type
thesis
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ntu-97-R95723018-1.pdf
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