The effect of heterogeneous beliefs on mergers and acquisitions |
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Authors: | Lu Deng Mingqing Liao |
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Institution: | 1. School of Economics and Management, Beihang University, Beijing, China;2. College of Business Administration, South China University of Technology, Guangzhou, China |
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Abstract: | This article investigates the effect of heterogeneous beliefs on firms’ mergers and acquisitions (M&A) decisions. Using data of China’s financial market, which is featured with great heterogeneity of belief, we find that heterogeneous beliefs are positively associated with the occurrence of M&A transactions, and firms with greater heterogeneous beliefs are more likely to pay the transactions with stock. Moreover, we show that government intervention, measured by state ownership, weakens the effect of heterogeneous beliefs on firms’ M&A decisions. |
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Keywords: | Heterogeneous beliefs mergers and acquisitions state ownership China |
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